LOAN AGREEMENT
Dated as of December ___, 2005
Between
RD ELMWOOD ASSOCIATES, L.P.,
as Borrower
and
BEAR STEARNS COMMERCIAL MORTGAGE, INC.,
as Lender
TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.................................................................1
Section 1.1 Definitions.........................................................................1
Section 1.2 Principles of Construction.........................................................22
II. GENERAL TERMS..........................................................................................22
Section 2.1 Loan Commitment; Disbursement to Borrower..........................................22
Section 2.2 Interest Rate......................................................................23
Section 2.3 Loan Payment.......................................................................28
Section 2.4 Prepayments........................................................................29
Section 2.5 Defeasance.........................................................................30
Section 2.6 Release of Property................................................................30
Section 2.7 Lockbox Account/Cash Management....................................................31
III. CONDITIONS PRECEDENT...................................................................................34
Section 3.1 Conditions Precedent to Closing....................................................34
IV. REPRESENTATIONS AND WARRANTIES.........................................................................38
Section 4.1 Borrower Representations...........................................................38
Section 4.2 Survival of Representations........................................................48
V. BORROWER COVENANTS.....................................................................................48
Section 5.1 Affirmative Covenants..............................................................48
Section 5.2 Negative Covenants.................................................................58
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS....................................................63
Section 6.1 Insurance..........................................................................63
Section 6.2 Casualty...........................................................................67
Section 6.3 Condemnation.......................................................................67
Section 6.4 Restoration........................................................................67
VII. RESERVE FUNDS..........................................................................................72
Section 7.1 Required Repairs...................................................................72
Section 7.2 Tax and Insurance Escrow Fund......................................................73
Section 7.3 Replacements Reserve...............................................................73
Section 7.4 Rollover Reserve...................................................................77
Section 7.5 Tenant Reserves....................................................................78
Section 7.6 Reserve Funds, Generally...........................................................79
VIII. DEFAULTS...............................................................................................79
Section 8.1 Event of Default...................................................................79
Section 8.2 Remedies...........................................................................81
Section 8.3 Remedies Cumulative; Waivers.......................................................83
IX. SPECIAL PROVISIONS.....................................................................................83
Section 9.1 Sale of Notes and Securitization...................................................83
Section 9.2 Securitization Indemnification.....................................................85
Section 9.3 Exculpation........................................................................88
Section 9.4 Matters Concerning Manager.........................................................89
Section 9.5 Servicer...........................................................................90
X. MISCELLANEOUS..........................................................................................90
Section 10.1 Survival...........................................................................90
Section 10.2 Lender's Discretion................................................................90
Section 10.3 Governing Law......................................................................90
Section 10.4 Modification, Waiver in Writing....................................................92
Section 10.5 Delay Not a Waiver.................................................................92
Section 10.6 Notices............................................................................92
Section 10.7 Trial by Jury......................................................................93
Section 10.8 Headings...........................................................................93
Section 10.9 Severability.......................................................................93
Section 10.10 Preferences........................................................................94
Section 10.11 Waiver of Notice...................................................................94
Section 10.12 Remedies of Borrower...............................................................94
Section 10.13 Expenses; Indemnity................................................................94
Section 10.14 Schedules Incorporated.............................................................95
Section 10.15 Offsets, Counterclaims and Defenses................................................95
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries......................96
Section 10.17 Publicity..........................................................................96
Section 10.18 Waiver of Marshalling of Assets....................................................96
Section 10.19 Waiver of Counterclaim.............................................................96
Section 10.20 Conflict; Construction of Documents; Reliance......................................96
Section 10.21 Brokers and Financial Advisors.....................................................97
Section 10.22 Prior Agreements...................................................................97
Section 10.23 Joint and Several Liability........................................................97
Section 10.24 Certain Additional Rights of Lender (VCOC).........................................97
Section 10.25 MERS...............................................................................97
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SCHEDULES
Schedule I - Rent Roll
Schedule II - Required Repairs - Deadlines for Completion
Schedule III - Organizational Chart of Borrower
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December ___, 2005 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New
York corporation, having an address at 383 Madison Avenue, New York, New York
10179 ("LENDER") and RD ELMWOOD ASSOCIATES, L.P., a Delaware limited
partnership, having its principal place of business at c/o Acadia Realty Trust,
1311 Mamaroneck Avenue - Suite 260, White Plains, New York 10605 ("BORROWER").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter
defined) from Lender; 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 (as hereinafter defined).
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 required or unless the context clearly indicates a
contrary intent:
"ACQUIRED PROPERTY" shall have the meaning set forth in
Section 5.1.11(g)(i) hereof.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set
forth in Section 5.1.11(g)(i) hereof.
"ADDITIONAL INSOLVENCY OPINION" shall have the meaning set
forth in Section 4.1.30(c) hereof.
"AFFILIATE" shall mean, as to any Person, any other Person
that, directly or indirectly, is in Control of, is Controlled by or is under
common Control with such Person or is a director or officer of such Person or of
an Affiliate of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to an
Affiliate of Borrower, Principal or Guarantor.
"AFFILIATED MANAGER" shall mean any Manager in which Borrower,
Principal, or Guarantor has, directly or indirectly, any legal, beneficial or
economic interest.
"AGENT" shall mean Wells Fargo Bank, N.A., a national banking
institution, or any successor Eligible Institution acting as Agent under the
Cash Management Agreement.
"AGREEMENT" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all
planned Capital Expenditures, for the Property prepared by Borrower in
accordance with Section 5.1.11.(e) hereof for the applicable Fiscal Year or
other period.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in
Section 5.1.11(e) hereof.
"ASSIGNMENT OF LEASES" shall mean that certain first priority
Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as
assignor, to MERS, as nominee of Lender as assignee, assigning to Lender all of
Borrower's interest in and to the Leases and Rents of the Property as security
for the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of the
Property.
"BANKRUPTCY ACTION" shall mean with respect to any Person (a)
such Person filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary
petition against such Person under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, in which such Person colludes with, or
otherwise assists such Person, or causes to be solicited petitioning creditors
for any involuntary petition against such Person; (c) such Person filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against it, by any other Person under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (d) such Person consenting
to or acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee, or examiner for such Person or any portion of the
Property; (e) such Person making an assignment for the benefit of creditors, or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code, 11 U.S.C. ss.101, et seq., as the same may be amended from time to time,
and any successor statute or statutes and all rules and regulations from time to
time promulgated thereunder, and any comparable foreign laws relating to
bankruptcy, insolvency or creditors' rights or any other Federal or state
bankruptcy or insolvency law.
"BASIC CARRYING COSTS" shall mean, the sum of the following
costs associated with the Property for the relevant Fiscal Year or payment
period: (a) Taxes, (b) Other Charges and (c) Insurance Premiums.
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"BORROWER" shall have the meaning set forth in the
introductory paragraph hereto, together with its successors and permitted
assigns.
"BSCMI" shall mean Bear Stearns Commercial Mortgage, Inc., a
New York corporation, and its successors in interest.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in New York, New York, or the
place of business of any Servicer are not open for business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount
expended for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in
Section 2.7.2 hereof.
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash
Management Agreement, dated as of the date hereof, by and among Borrower, Agent
and Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"CASUALTY" shall have the meaning set forth in Section 6.2
hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in
Section 6.4(b)(iii) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in
Section 6.4(b)(iv) hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in
Section 6.4(b).
"CONTROL" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management, policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise. "CONTROLLED" and "CONTROLLING" shall have correlative
meanings.
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"COVERED DISCLOSURE INFORMATION" shall have the meaning set
forth in Section 9.2(b) hereof.
"DEBT" shall mean the outstanding principal amount set forth
in, and evidenced by, this Agreement and the Note together with all interest
accrued and unpaid thereon and all other sums (including the Defeasance Payment
Amount, any Yield Maintenance Premium and any Yield Maintenance Default Premium)
due to Lender in respect of the Loan under the Note, this Agreement, the
Mortgage or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular
period of time, scheduled principal and interest payments due under this
Agreement and the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the
applicable period in which:
(a) the numerator is the Net Operating Income (excluding
interest on credit accounts and using annualized operating
expenses for any recurring expenses not paid monthly
(e.g., Taxes and Insurance Premiums)) for such period as
set forth in the statements required hereunder, without
deduction for (i) actual management fees incurred in
connection with the operation of the Property, or (ii)
amounts paid to the Reserve Funds, less (A) management
fees equal to the greater of (1) assumed management fees
of four percent (4%) of Gross Income from Operations or
(2) the actual management fees incurred, and (B)
Replacement Reserve Fund contributions equal to $0.15 per
square foot of gross leasable area at the Property, (C)
Rollover Reserve Fund contributions equal to $43,000.00
per annum; and
(b) the denominator is the aggregate amount of principal and
interest due and payable on the Note for such period.
"DEBT SERVICE COVERAGE RATIO DETERMINATION DATE" shall mean
the date that Lender determines the Debt Service Coverage Ratio in accordance
with this Agreement.
"DEFAULT" shall mean the occurrence of any event hereunder or
under any other Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate
per annum equal to the lesser of (a) the maximum rate permitted by applicable
law or (b) five percent (5%) above the Interest Rate.
"DEFEASANCE DATE" shall have the meaning set forth in Section
2.5.1(a)(i) hereof.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the
remaining principal amount of the Note, the Defeasance Payment Amount, any costs
and expenses incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any revenue, documentary
stamp or intangible taxes or any other tax or charge due in connection with the
transfer of the Note or otherwise required to accomplish the agreements of
Sections 2.4 and 2.5 hereof (including, without limitation, any fees and
expenses of accountants, attorneys and the Rating Agencies incurred in
connection therewith).
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"DEFEASANCE EVENT" shall have the meaning set forth in Section
2.5.1(a) hereof.
"DEFEASANCE EXPIRATION DATE" shall mean the date that is
earlier to occur of (a) two (2) years from the "startup day" within the meaning
of Section 860G(a)(9) of the Code for the REMIC Trust or (b) the third (3rd)
anniversary of the first (1st) Payment Date.
"DEFEASANCE PAYMENT AMOUNT" shall mean the amount (if any)
which, when added to the remaining principal amount of the Note, will be
sufficient to purchase U.S. Obligations providing the required Scheduled
Defeasance Payments.
"DISCLOSURE DOCUMENT" shall mean a prospectus, prospectus
supplement, private placement memorandum, or similar offering memorandum or
offering circular, or such other information reasonably requested by Lender, in
each case in preliminary or final form, used to offer Securities in connection
with a Securitization.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable
account from all other funds held by the holding institution that is either (a)
an account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company, is subject to regulations substantially similar to
12 C.F.R. ss.9.10(b), having in either case a combined capital and surplus of at
least Fifty Million and 00/100 Dollars ($50,000,000.00) and subject to
supervision or examination by federal and state authority. An Eligible Account
will not be evidenced by a certificate of deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or
trust company, the short term unsecured debt obligations or commercial paper of
which are rated at least "A-1+" by S&P, "P-1" by Moody's and "F-1+" by Fitch in
the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of accounts in which funds are held for more than thirty (30) days,
the long-term unsecured debt obligations of which are rated at least "AA" by
Fitch and S&P and "Aa2" by Moody's).
"EMBARGOED PERSON" shall have the meaning set forth in Section
5.1.23 hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain
Environmental Indemnification Agreement, dated as of the date hereof, executed
by Borrower, Principal and Guarantor in connection with the Loan for the benefit
of Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"EVENT OF DEFAULT" shall have the meaning set forth in Section
8.1(a) hereof.
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"EXCHANGE ACT" shall have the meaning set forth in Section
9.2(a) hereof.
"EXCHANGE ACT FILING" shall have the meaning set forth in
Section 5.1.11(h) hereof.
"EXTRAORDINARY EXPENSE" shall have the meaning set forth in
Section 5.1.11(d) hereof.
"FISCAL YEAR" shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of the term
of the Loan.
"FITCH" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (foreign, federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean, for any period, all
sustainable income, computed in accordance with GAAP, derived from the ownership
and operation of the Property from whatever source during such period,
including, but not limited to, Rents from tenants in occupancy, open for
business and paying full contractual rent without right of offset or credit,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, income from vending machines, business interruption or other loss of
income or rental insurance proceeds or other required pass-throughs and interest
on Reserve Accounts, if any, but excluding Rents from month-to-month tenants,
straight line lease adjustments, or tenants that are included in any Bankruptcy
Action, sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds (other than business interruption or other loss of income or rental
insurance), Awards, unforfeited security deposits, utility and other similar
deposits and any disbursements to Borrower from the Reserve Funds, if any. Gross
income shall not be diminished as a result of the Mortgage or the creation of
any intervening estate or interest in the Property or any part thereof.
"GUARANTOR" shall mean Acadia Realty Limited Partnership, a
Delaware limited partnership.
"GUARANTY" shall mean that certain Guaranty Agreement, dated
as of the date hereof, executed and delivered by Guarantor in connection with
the Loan to and for the benefit of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"IMPROVEMENTS" shall have the meaning set forth in the
granting clause of the Mortgage.
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"INDEBTEDNESS" of a Person, at a particular date, means the
sum (without duplication) at such date of (a) all indebtedness or liability of
such Person (including, without limitation, amounts for borrowed money and
indebtedness in the form of mezzanine debt or preferred equity); (b) obligations
evidenced by bonds, debentures, notes, or other similar instruments; (c)
obligations for the deferred purchase price of property or services (including
trade obligations); (d) obligations under letters of credit; (e) obligations
under acceptance facilities; (f) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent
obligations to purchase, to provide funds for payment, to supply funds, to
invest in any Person or entity, or otherwise to assure a creditor against loss;
and (g) obligations secured by any Liens, whether or not the obligations have
been assumed (other than the Permitted Encumbrances).
"INDEMNIFIED PERSON" shall have the meaning set forth in
Section 9.2(b) hereof.
"INDEMNIFYING PERSON" shall mean each of Borrower, Principal
and Guarantor.
"INDEPENDENT DIRECTOR" shall mean a natural person serving as
director of a corporation or manager of a limited liability company who is not
at the time of initial appointment, or at any time while serving in such
capacity, and has not been at any time during the preceding five (5) years: (a)
a stockholder, director (with the exception of serving as the Independent
Director of Borrower or Principal), trustee, officer, employee, partner, member,
attorney or counsel of the Borrower or Principal or any Affiliate of either of
them; (b) a creditor, customer, supplier or other Person who derives any of its
purchases or revenues from its activities with the Borrower or Principal or any
Affiliate of either of them; (c) a Person or other entity Controlling or under
common Control with any Person excluded from serving as Independent Director
under subparagraph (a) or (b); or (d) a member of the immediate family of any
Person excluded from serving as Independent Director under subparagraph (a) or
(b). A natural person who satisfies the foregoing definition other than
subparagraph (b) shall not be disqualified from serving as an Independent
Director of the Principal if such individual is an independent director provided
by a nationally-recognized company that provides professional independent
directors and that also provides other corporate services in the ordinary course
of its business. A natural person who otherwise satisfies the foregoing
definition except for being the independent director of a "special purpose
entity" affiliated with Borrower or Principal shall not be disqualified from
serving as an Independent Director of Borrower or Principal if such "special
purpose entity" does not own a direct or indirect equity interest in Borrower or
in any co-borrower and if such individual is provided by a nationally-recognized
company that provides professional independent directors. For purposes of this
paragraph, a "special purpose entity" is an entity, whose organizational
documents contain restrictions on its activities substantially similar to those
set forth in the definition of Special Purpose Entity in this Agreement.
"INSOLVENCY OPINION" shall mean that certain non-consolidation
opinion letter dated the date hereof delivered by Levenfeld Pearlstein, LLC in
connection with the Loan.
"INSURANCE PREMIUMS" shall have the meaning set forth in
Section 6.1(b) hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in
Section 6.4(b) hereof.
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"INTEREST RATE" shall mean a rate of Five and Five Hundred
Thirty-One Thousandths percent (5.531%) per annum.
"LEASE" shall mean any lease, sublease or subsublease,
letting, license, concession or other agreement (whether written or oral and
whether now or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of any
space in the Property by or on behalf of Borrower, and (a) 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 (b) every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean, all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting the 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 Borrower, the Property or any part thereof, including, without
limitation, any which may (a) require repairs, modifications or alterations in
or to the Property or any part thereof, or (b) in any way limit the use and
enjoyment thereof.
"LENDER" shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.
"LIABILITIES" shall have the meaning set forth in Section
9.2(b) hereof.
"LICENSES" shall have the meaning set forth in Section 4.1.22
hereof.
"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 Borrower, the Property, any portion thereof 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, and mechanic's, materialmen's and other similar liens and
encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower pursuant
to this Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Note, the Mortgage, the Assignment of Leases, the Environmental Indemnity, the
O&M Agreement, the Guaranty, the Cash Management Agreement and all other
documents executed and/or delivered in connection with the Loan.
"LOCKBOX ACCOUNT" shall have the meaning set forth in Section
2.7.1 hereof.
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"LOCKBOX AGREEMENT" shall mean that certain Lockbox and
Blocked Account Agreement dated the date hereof among Borrower, Lender and
Lockbox Bank, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, relating to funds deposited in the Lockbox
Account.
"LOCKBOX BANK" shall mean Wells Fargo, N.A., or any successor
or permitted assigns thereof.
"LOCKBOX TRIGGER CURE": shall mean (a) with respect to a
Lockbox Trigger Event described in clause (a) of the definition thereof, the
acceptance of a cure of the related Event of Default by Lender, (b) with respect
to a Lockbox Trigger Event caused by (i) a Material Action relating to Manager,
the replacement of such Manager with a Qualified Manager within sixty (60) days
of the occurrence of the related Material Action and (ii) a Material Action
relating to Pathmark. and or Walgreen, (x) the reletting of at least
seventy-five percent (75%) (on a square footage basis) of the space previously
occupied by Pathmark and/or Walgreen, as the case may be, as of the Closing Date
pursuant to Leases reasonably acceptable to Lender and the tenants thereunder
are in possession, open for business and paying rent as evidenced by estoppel
certificates reasonably acceptable to Lender and (y) the Debt Service Coverage
Ratio thereafter equaling or exceeding 1.10 to 1.0 for two (2) consecutive
calendar quarters, (c) with respect to a Lockbox Trigger Event described in
clause (d) of the definition thereof, the Property maintaining a Debt Service
Coverage Ratio of 1.05 to 1.0 for one calendar quarter on a trailing six month
basis annualized; provided, however, in no event shall there be more than two
(2) Lockbox Trigger Cures in any twelve (12) month period or more than four (4)
Lockbox Trigger Cures during the term of the Loan.
"LOCKBOX TRIGGER EVENT" shall mean, (a) an Event of Default
shall have occurred, (b) the insolvency of Borrower, the Manager, Pathmark
and/or Walgreen, (c) if Pathmark and/or Walgreen shall cease its respective
operations at the Property, or (d) that as of any Debt Service Coverage Ratio
Determination Date the Debt Service Coverage Ratio for the trailing twelve (12)
month period, as determined by Lender in accordance with the applicable
provisions of this Agreement, is less than 1.05 to 1.
"LOCKBOX TRIGGER EVENT PERIOD" shall have the meaning set
forth in the Cash Management Agreement.
"MANAGEMENT AGREEMENT" shall mean any management agreement
entered into by and between Borrower and Manager, pursuant to which Manager is
to provide management and other services with respect to the Property, or, if
the context requires, the Replacement Management Agreement.
"MANAGER" shall mean a Qualified Manager who is managing the
Property in accordance with the terms and provisions of this Agreement pursuant
to a Management Agreement or a Replacement Management Agreement, as applicable.
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"MATERIAL ACTION" means, with respect to any Person, to file
any insolvency or reorganization case or proceeding, to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, to institute proceedings
under any applicable insolvency law, to seek any relief under any law relating
to relief from debts or the protection of debtors, to consent to the filing or
institution of bankruptcy or insolvency proceedings against such Person, to file
a petition seeking, or consent to, reorganization or relief with respect to such
Person under any applicable federal or state law relating to bankruptcy or
insolvency, to seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian, or any similar official of or for
such Person or a substantial part of its property, to make any assignment for
the benefit of creditors of such Person, to admit in writing such Person's
inability to pay its debts generally as they become due, or to take action in
furtherance of any of the foregoing.
"MATURITY DATE" shall mean January 1, 2016, or such other date
on which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"MERS" shall have the meaning set forth in Section 10.25
hereof.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean (a) an amount
equal to interest in an amount equal to $5,315.91 per day only on the
outstanding principal balance of the Loan, calculated in accordance with the
terms hereof, for each Payment Date commencing with the Payment Date occurring
in February, 2006 through and including the Payment Date occurring in January,
2010 and (b) a constant monthly payment of $197,128.49 with respect to each
Payment Date thereafter.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean, that certain first priority Mortgage
(or Deed of Trust or Deed to Secure Debt) and Security Agreement, dated the date
hereof, executed and delivered by Borrower to MERS, as nominee of Lender, as
security for the Loan and encumbering the Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"NET CASH FLOW" shall mean, for any period, the amount
obtained by subtracting Operating Expenses and Capital Expenditures for such
period from Gross Income from Operations for such period.
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in
Section 5.1.11(b) hereof.
"NET OPERATING INCOME" shall mean the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.
"NET PROCEEDS" shall have the meaning set forth in Section
6.4(b) hereof.
10
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in
Section 6.4(b)(vi) hereof.
"NOTE" shall mean that certain Promissory Note, dated the date
hereof, in the principal amount of Thirty-Four Million Six Hundred Thousand and
00/100 Dollars ($34,600,000), made by Borrower in favor of Lender, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time, including any Defeased Note and Undefeased Note that may exist from
time to time.
"O&M AGREEMENT" shall mean, that certain Operations and
Maintenance Agreement, dated as of the date hereof, between Borrower and Lender
given in connection with the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized officer of the general
partner or managing member of Borrower.
"OPERATING EXPENSES" shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the operation,
maintenance and management of the Property that are incurred on a regular
monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments as
approved by Lender, and other similar costs, but excluding depreciation, Debt
Service, Capital Expenditures and contributions to the Reserve Funds.
"OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"OTHER OBLIGATIONS" shall have the meaning as set forth in the
Mortgage.
"PATHMARK" shall mean Parthmark Stores, Inc.
"PAYMENT DATE" shall mean the first (1st) day of each calendar
month during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.
"PERMITTED ENCUMBRANCES" shall mean, with respect to the
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy, (c) Liens, if any, for Taxes imposed by any Governmental
Authority not yet due or delinquent, and (d) such other title and survey
exceptions as Lender has approved or may approve in writing in Lender's sole
discretion, which Permitted Encumbrances in the aggregate do not materially
adversely affect the value or use of the Property or Borrower's ability to repay
the Loan.
11
"PERMITTED INVESTMENTS" shall have the meaning set forth in
the Cash Management Agreement.
"PERMITTED RELEASE DATE" shall mean the date that is the third
(3rd) anniversary of the first Payment Date.
"PERMITTED TRANSFER" means any of the following: (a) any
transfer, directly as a result of the death of a natural person, of stock,
membership interests, partnership interests or other ownership interests
previously held by the decedent in question to the Person or Persons lawfully
entitled thereto and (b) any transfer, directly as a result of the legal
incapacity of a natural person, of stock, membership interests, partnership
interests or other ownership interests previously held by such natural person to
the Person or Persons lawfully entitled thereto.
"PERSON" shall mean any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the
granting clause of the Mortgage.
"PHYSICAL CONDITIONS REPORT" shall mean, a structural
engineering report prepared by a company satisfactory to Lender regarding the
physical condition of the Property, satisfactory in form and substance to Lender
in its sole discretion, which report shall, among other things, (a) confirm that
the Property and its use complies, in all material respects, with all applicable
Legal Requirements (including, without limitation, zoning, subdivision and
building laws) and (b) include a copy of a final certificate of occupancy with
respect to all Improvements on the Property.
"POLICIES" shall have the meaning specified in Section 6.1(b)
hereof.
"POLICY" shall have the meaning specified in Section 6.1(b)
hereof.
"PREPAYMENT RATE" shall mean the bond equivalent yield (in the
secondary market) on the United States Treasury Security that as of the
Prepayment Rate Determination Date has a remaining term to maturity closest to,
but not exceeding, the remaining term to the Maturity Date as most recently
published in the "Treasury Bonds, Notes and Bills" section in The Wall Street
Journal as of such Prepayment Rate Determination Date. If more than one issue of
United States Treasury Securities has the same remaining term to the Maturity
Date, the "Prepayment Rate" shall be the yield on such United States Treasury
Security most recently issued as of the Prepayment Rate Determination Date. The
rate so published shall control absent manifest error. If the publication of the
Prepayment Rate in The Wall Street Journal is discontinued, Lender shall
determine the Prepayment Rate on the basis of "Statistical Release H.15 (519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System, or on the basis of such other
publication or statistical guide as Lender may reasonably select.
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"PREPAYMENT RATE DETERMINATION DATE" shall mean the date which
is five (5) Business Days prior to the date that such prepayment shall be
applied in accordance with the terms and provisions of Section 2.4.1 hereof.
"PRINCIPAL" shall mean the Special Purpose Entity that is the
general partner of Borrower, if Borrower is a limited partnership, or member of
Borrower, if Borrower is a limited liability company.
"PROPERTY" shall mean the parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by the Mortgage, together with all rights pertaining to such property and
Improvements, as more particularly described in the granting clauses of the
Mortgage and referred to therein as the "Property".
"PROVIDED INFORMATION" shall mean any and all financial and
other information provided at any time prepared by, or on behalf of, any
Indemnifying Person with respect to the Property, Borrower, Principal, Guarantor
and/or Manager, including, without limitation, any financial data or financial
statements required under Section 5.1.11.
"QUALIFIED MANAGER" shall mean in the reasonable judgment of
Lender, a reputable and experienced management organization (which may be an
Affiliate of Borrower) possessing experience in managing properties similar in
size, scope, use and value as the Property, provided, that Borrower shall have
obtained (i) prior written confirmation from the applicable Rating Agencies that
management of the Property by such Person will not cause a downgrade, withdrawal
or qualification of the then current ratings of the Securities or any class
thereof and (ii) if such Person is an Affiliate of Borrower, an Additional
Insolvency Opinion.
"RATING AGENCIES" shall mean each of S&P, Moody's and Fitch,
or any other nationally recognized statistical rating agency which has been
approved by Lender.
"RELATED ENTITIES" shall have the meaning set forth in Section
5.2.10(e) hereof.
"RELATED LOAN" shall mean a loan made to an Affiliate of
Borrower or secured by a Related Property, that is included in a Securitization
with the Loan.
"RELATED PARTIES" shall have the meaning set forth in the
definition of Special Purpose Entity.
"RELATED PARTY" shall have the meaning set forth in the
definition of Special Purpose Entity.
"RELATED PROPERTY" shall mean a parcel of real property,
together with improvements thereon and personal property related thereto, that
is "related", within the meaning of the definition of Significant Obligor, to
one or more of the Properties.
"REMIC TRUST" shall mean a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code that holds the Note.
13
"RENTS" shall mean, all rents (including percentage rents),
rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, all other
amounts payable as rent under any Lease or other agreement relating to the
Property, including, without limitation, charges for electricity, oil, gas,
water, steam, heat, ventilation, air-conditioning and any other energy,
telecommunication, telephone, utility or similar items or time use charges, HVAC
equipment charges, sprinkler charges, escalation charges, license fees,
maintenance fees, charges for Taxes, Operating Expenses or other reimbursables
payable to Borrower (or to the Manager, if any, for the account of Borrower)
under any Lease, 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 the Property.
"REPLACEMENT MANAGEMENT AGREEMENT" shall mean, collectively,
(a) either (i) a management agreement with a Qualified Manager substantially in
the same form and substance as the Management Agreement, or (ii) a management
agreement with a Qualified Manager, which management agreement shall be
reasonably acceptable to Lender in form and substance, provided, with respect to
this subclause (ii), Lender, at its option, may require that Borrower shall have
obtained prior written confirmation from the applicable Rating Agencies that
such management agreement will not cause a downgrade, withdrawal or
qualification of the then current rating of the Securities or any class thereof
and (b) an assignment of management agreement and subordination of management
fees substantially in the form then used by Lender (or of such other form and
substance reasonably acceptable to Lender), executed and delivered to Lender by
Borrower and such Qualified Manager at Borrower's expense.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth
in Section 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in
Section 7.3.1 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning
set forth in Section 7.3.1 hereof.
"REPLACEMENTS" shall have the meaning set forth in Section
7.3.1 hereof.
"RESERVE FUNDS" shall mean, collectively, the Tax and
Insurance Escrow Fund, the Replacement Reserve Fund, the Required Repair Fund,
the Rollover Reserve Fund and any other escrow fund established by the Loan
Documents.
"RESIZING EVENT" shall have the meaning set forth in Section
9.1.2.
"RESTORATION" shall mean the repair and restoration of the
Property after a Casualty or Condemnation as nearly as possible to the condition
the Property was in immediately prior to such Casualty or Condemnation, with
such alterations as may be reasonably approved by Lender.
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"RESTRICTED PARTY" shall mean collectively, (a) Borrower,
Principal, any Guarantor, and any Affiliated Manager and (b) any shareholder,
partner, member, non-member manager, any direct or indirect legal or beneficial
owner of, Borrower, Principal, any Guarantor, any Affiliated Manager or any
non-member manager.
"ROLLOVER RESERVE ACCOUNT" shall have the meaning set forth in
Section 7.4.1 hereof.
"ROLLOVER RESERVE FUND" shall have the meaning set forth in
Section 7.4.1 hereof.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of the McGraw-Hill Companies.
"SALE OR PLEDGE" shall mean a voluntary or involuntary sale,
conveyance, assignment, transfer, encumbrance, pledge, grant of option or other
transfer or disposal of a legal or beneficial interest, whether direct or
indirect.
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set
forth in Section 2.5.1(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 9.1
hereof.
"SECURITIES ACT" shall have the meaning set forth in Section
9.2(a) hereof.
"SECURITIZATION" shall have the meaning set forth in Section
9.1 hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in
Section 2.5.1(a)(vi) hereof.
"SERVICER" shall have the meaning set forth in Section 9.5
hereof.
"SERVICING AGREEMENT" shall have the meaning set forth in
Section 9.5 hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in
Section 8.2(c) hereof.
"SIGNIFICANT OBLIGOR" shall have the meaning set forth in Item
1101(k) of Regulation AB under the Securities Act.
"SPECIAL PURPOSE ENTITY" shall mean a corporation, limited
partnership or limited liability company that, since the date of its formation
and at all times on and after the date thereof, has complied with and shall at
all times comply with the following requirements unless it has received either
prior consent to do otherwise from Lender or a permitted administrative agent
thereof, or, while the Loan is securitized, confirmation from each of the
applicable Rating Agencies that such noncompliance would not result in the
requalification, withdrawal, or downgrade of the ratings of any Securities or
any class thereof:
15
(i) is and shall be organized solely for the purpose of
(A) in the case of Borrower, acquiring, developing, owning,
holding, selling, leasing, transferring, exchanging, managing
and operating the Property, entering into and performing its
obligations under the Loan Documents with Lender, refinancing
the Property in connection with a permitted repayment of the
Loan, and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; or (B)
in the case of a Principal, acting as a general partner of the
limited partnership that owns the Property or as member of the
limited liability company that owns the Property and
transacting lawful business that is incident, necessary and
appropriate to accomplish the foregoing;
(ii) has not engaged and shall not engage in any business
unrelated to (A) the acquisition, development, ownership,
management or operation of the Property, or (B) in the case of
a Principal, acting as general partner of the limited
partnership that owns the Property or acting as a member of
the limited liability company that owns the Property, as
applicable;
(iii) has not owned and shall not own any real property
other than, in the case of Borrower, the Property;
(iv) does not have, shall not have and at no time had any
assets other than (A) in the case of Borrower, the Property
and personal property necessary or incidental to its ownership
and operation of the Property or (B) in the case of a
Principal, its partnership interest in the limited partnership
or the member interest in the limited liability company that
owns the Property and personal property necessary or
incidental to its ownership of such interests;
(v) has not engaged in, sought, consented or permitted to
and shall not engage in, seek, consent to or permit (A) any
dissolution, winding up, liquidation, consolidation or merger,
(B) any sale or other transfer of all or substantially all of
its assets or any sale of assets outside the ordinary course
of its business, except as permitted by the Loan Documents, or
(C) in the case of a Principal, any transfer of its
partnership or membership interests; (vi) shall not cause,
consent to or permit any amendment of its limited partnership
agreement, articles of incorporation, articles of
organization, certificate of formation, operating agreement or
other formation document or organizational document (as
applicable) with respect to the matters set forth in this
definition;
(vii) if such entity is a limited partnership, has and
shall have at least one general partner and has and shall
have, as its only general partners, Special Purpose Entities
each of which (A) is a corporation or single-member Delaware
limited liability company, (B) has one Independent Director,
and (C) holds a direct interest as general partner in the
limited partnership of not less than 0.5% (or 0.1%, if the
limited partnership is a Delaware entity);
16
(viii) if such entity is a corporation, has and shall have
at least one (1) Independent Director, and shall not cause or
permit the board of directors of such entity to take any
Material Action either with respect to itself or, if the
corporation is a Principal, with respect to Borrower or any
action requiring the unanimous affirmative vote of one hundred
percent (100%) of the members of its board of directors unless
one Independent Director shall have participated in such vote
and shall have voted in favor of such action;
(ix) if such entity is a limited liability company (other
than a limited liability company meeting all of the
requirements applicable to a single-member limited liability
company set forth in this definition of "Special Purpose
Entity"), has and shall have at least one (1) member that is a
Special Purpose Entity, that is a corporation, that has at
least one (1) Independent Director and that directly owns at
least one-half-of-one percent (0.5%) of the equity of the
limited liability company (or 0.1% if the limited liability
company is a Delaware entity);
(x) if such entity is a single-member limited liability
company, (A) is and shall be a Delaware limited liability
company, (B) has and shall have at least one (1) Independent
Director serving as manager of such company, (C) shall not
take any Material Action and shall not cause or permit the
members or managers of such entity to take any Material
Action, either with respect to itself or, if the company is a
Principal, with respect to Borrower, in each case unless one
Independent Director then serving as manager of the company
shall have participated and consented in writing to such
action, and (D) has and shall have either (1) a member which
owns no economic interest in the company, has signed the
company's limited liability company agreement and has no
obligation to make capital contributions to the company, or
(2) two natural persons or one entity that is not a member of
the company, that has signed its limited liability company
agreement and that, under the terms of such limited liability
company agreement becomes a member of the company immediately
prior to the withdrawal or dissolution of the last remaining
member of the company;
(xi) has not and shall not (and, if such entity is (a) a
limited liability company, has and shall have a limited
liability agreement or an operating agreement, as applicable,
(b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of
incorporation or articles that, in each case, provide that
such entity shall not) (1) dissolve, merge, liquidate,
consolidate; (2) sell all or substantially all of its assets;
(3) amend its organizational documents with respect to the
matters set forth in this definition without the consent of
Lender; or (4) without the affirmative vote of one Independent
Director of itself or the consent of a Principal that is a
member or general partner in it: (A) file or consent to the
filing of any bankruptcy, insolvency or reorganization case or
proceeding, institute any proceedings under any applicable
insolvency law or otherwise seek relief under any laws
relating to the relief from debts or the protection of debtors
generally, file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings; (B) seek or
consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar
official for the entity or a substantial portion of its
property; (C) make an assignment for the benefit of the
creditors of the entity; or (D) take any action in furtherance
of any of the foregoing;
17
(xii) has at all times been and shall at all times remain
solvent and has paid and shall pay its debts and liabilities
(including, a fairly-allocated portion of any personnel and
overhead expenses that it shares with any Affiliate) from its
assets as the same shall become due, and has maintained and
shall 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;
(xiii) has not failed and shall not fail to correct any
known misunderstanding regarding the separate identity of such
entity and has not identified and shall not identify itself as
a division of any other Person;
(xiv) has maintained and shall maintain its bank accounts,
books of account, books and records separate from those of any
other Person and, to the extent that it is required to file
tax returns under applicable law, has filed and shall file its
own tax returns, except to the extent that it is required by
law to file consolidated tax returns and, if it is a
corporation, has not filed and shall not file a consolidated
federal income tax return with any other corporation, except
to the extent that it is required by law to file consolidated
tax returns;
(xv) has maintained and shall maintain its own records,
books, resolutions and agreements;
(xvi) has not commingled and shall not commingle its funds
or assets with those of any other Person and has not
participated and shall not participate in any cash management
system with any other Person;
(xvii) has held and shall hold its assets in its own name;
(xviii) has conducted and shall conduct its business in
its name or in a name franchised or licensed to it by an
entity other than an Affiliate of itself or of Borrower,
except for business conducted on behalf of itself by another
Person under a business management services agreement that is
on commercially-reasonable terms, so long as the manager, or
equivalent thereof, under such business management services
agreement holds itself out as an agent of Borrower;
(xix) (A) has maintained and shall maintain its financial
statements, accounting records and other entity documents
separate from those of any other Person; (B) has shown and
shall show, in its financial statements, its asset and
liabilities separate and apart from those of any other Person;
and (C) has not permitted and shall not permit its assets to
be listed as assets on the financial statement of any of its
Affiliates except as required by GAAP; provided, however, that
any such consolidated financial statement contains a note
indicating that the Special Purpose Entity's separate assets
and credit are not available to pay the debts of such
Affiliate and that the Special Purpose Entity's liabilities do
not constitute obligations of the consolidated entity;
18
(xx) has paid and shall pay its own liabilities and
expenses, including the salaries of its own employees, out of
its own funds and assets, and has maintained and shall
maintain a sufficient number of employees in light of its
contemplated business operations;
(xxi) has observed and shall observe all partnership,
corporate or limited liability company formalities, as
applicable;
(xxii) has not incurred any Indebtedness other than (i)
acquisition financing with respect to the Property;
construction financing with respect to the Improvements and
certain off-site improvements required by municipal and other
authorities as conditions to the construction of the
Improvements; and first mortgage financings secured by the
Property; and Indebtedness pursuant to letters of credit,
guaranties, interest rate protection agreements and other
similar instruments executed and delivered in connection with
such financings, (ii) unsecured trade payables and operational
debt not evidenced by a note, and (iii) Indebtedness incurred
in the financing of equipment and other personal property used
on the Property;
(xxiii) has not incurred and shall have no Indebtedness
other than (i) the Loan, (ii) liabilities incurred in the
ordinary course of business relating to the ownership and
operation of the Property and the routine administration of
Borrower, in amounts not to exceed $690,000 which liabilities
are not more than sixty (60) days past the date incurred, are
not evidenced by a note and are paid when due, and which
amounts are normal and reasonable under the circumstances, and
(iii) such other liabilities that are permitted pursuant to
this Agreement;
(xxiv) has not assumed, guaranteed or become obligated and
shall not assume or guarantee or become obligated for the
debts of any other Person, has not held out and shall not hold
out its credit as being available to satisfy the obligations
of any other Person or has not pledged and shall not pledge
its assets for the benefit of any other Person, in each case
except as permitted pursuant to this Agreement;
(xxv) has not acquired and shall not acquire obligations
or securities of its partners, members or shareholders or any
other owner or Affiliate;
(xxvi) has allocated and shall allocate fairly and
reasonably any overhead expenses that are shared with any of
its Affiliates, constituents, or owners, or any guarantors of
any of their respective obligations, or any Affiliate of any
of the foregoing (individually, a "Related Party" and
collectively, the "Related Parties"), including, but not
limited to, paying for shared office space and for services
performed by any employee of an Affiliate;
19
(xxvii) has maintained and used and shall maintain and use
separate stationery, invoices and checks bearing its name and
not bearing the name of any other entity unless such entity is
clearly designated as being the Special Purpose Entity's
agent;
(xxviii) has not pledged and shall not pledge its assets
to or for the benefit of any other Person other than with
respect to loans secured by the Property and no such pledge
remains outstanding except to Lender to secure the Loan;
(xxix) has held itself out and identified itself and shall
hold itself out and identify itself as a separate and distinct
entity under its own name or in a name franchised or licensed
to it by an entity other than an Affiliate of Borrower and not
as a division or part of any other Person;
(xxx) has maintained and shall maintain its assets in such
a manner that it shall not be costly or difficult to
segregate, ascertain or identify its individual assets from
those of any other Person;
(xxxi) has not made and shall not make loans to any Person
and has not held and shall not hold evidence of indebtedness
issued by any other Person or entity (other than cash and
investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(xxxii) has not identified and shall not identify its
partners, members or shareholders, or any Affiliate of any of
them, as a division or part of it, and has not identified
itself and shall not identify itself as a division of any
other Person;
(xxxiii) other than capital contributions and
distributions permitted under the terms of its organizational
documents, has not entered into or been a party to, and shall
not enter into or be a party to, any transaction with any of
its partners, members, shareholders or Affiliates except in
the ordinary course of its business and on terms which are
commercially reasonable terms comparable to those of an
arm's-length transaction with an unrelated third party;
(xxxiv) has not had and shall not have any obligation to,
and has not indemnified and shall not indemnify its partners,
officers, directors or members, as the case may be, in each
case unless such an obligation or indemnification is fully
subordinated to the Debt and shall not constitute a claim
against it in the event that its cash flow is insufficient to
pay the Debt;
(xxxv) if such entity is a corporation, has considered and
shall consider the interests of its creditors in connection
with all corporate actions;
(xxxvi) has not had and shall not have any of its
obligations guaranteed by any Affiliate except as provided by
the Loan Documents;
20
(xxxvii) has not formed, acquired or held and shall not
form, acquire or hold any subsidiary, except that a Principal
may acquire and hold its interest in Borrower;
(xxxviii) has complied and shall comply with all of the
terms and provisions contained in its organizational
documents.
(xxxix) has conducted and shall conduct its business so
that each of the assumptions made about it and each of the
facts stated about it in the Insolvency Opinion are true;
(xl) has not permitted and shall not permit any Affiliate
or constituent party independent access to its bank accounts;
(xli) is and shall continue to be duly formed, validly
existing, and in good standing in the state of its
incorporation or formation and in all other jurisdictions
where it is qualified to do business;
(xlii) has paid all taxes which it owes and is not
currently involved in any dispute with any taxing authority;
(xliii) is not now party to any lawsuit, arbitration,
summons, or legal proceeding that resulted in a judgment
against it that has not been paid in full;
(xliv) has no judgments or Liens of any nature against it
except for tax liens not yet due and the Permitted
Encumbrances;
(xlv) has provided Lender with complete financial
statements that reflect a fair and accurate view of the
entity's financial condition; and
(xlvi) has no material contingent or actual obligations
not related to the Property.
"STATE" shall mean, the State or Commonwealth in which the
Property or any part thereof is located.
"SUCCESSOR BORROWER" shall have the meaning set forth in
Section 2.5.3 hereof.
"SURVEY" shall mean a survey of the Property prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set
forth in Section 7.2 hereof.
"TAXES" shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against the Property or part thereof.
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"THRESHOLD AMOUNT" shall have the meaning set forth in Section
5.1.21 hereof.
"TITLE INSURANCE POLICY" shall mean, an ALTA mortgagee title
insurance policy in the form acceptable to Lender (or, if the Property is in a
State which does not permit the issuance of such ALTA policy, such form as shall
be permitted in such State and acceptable to Lender) issued with respect to the
Property and insuring the lien of the Mortgage.
"TRANSFER" shall have the meaning set forth in Section
5.2.10(b) hereof.
"TRANSFEREE" shall have the meaning set forth in Section
5.2.10(e)(iii) hereof.
"TRANSFEREE'S PRINCIPALS" shall mean collectively, (A)
Transferee's managing members, general partners or principal shareholders and
(B) such other members, partners or shareholders which directly or indirectly
shall own a fifty-one percent (51%) or greater economic and voting interest in
Transferee..
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the State in which the Property is located.
"U.S. OBLIGATIONS" shall mean non-redeemable securities
evidencing an obligation to timely pay principal and/or interest in a full and
timely manner that are (a) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged, (b) other
non-callable "government securities" as defined in Treasury Regulations Section
1.860G-2(a)(8)(i), as amended, which will not result in a downgrade, withdrawal
or qualification of the ratings for the Securities or any class thereof issued
in connection with a Securitization which are then outstanding (c) issued by an
agency of the United States of America only if (i) the Rating Agencies provide
confirmation acceptable to Lender in its sole discretion which will not result
in a downgrade, withdrawal or qualification of the ratings for the Securities or
any class thereof issued in connection with a Securitization which are then
outstanding and (ii) a tax opinion provided by Borrower's counsel in form and
substance acceptable to Lender in its sole discretion confirming that, if a
Securitization has occurred, the REMIC trust formed pursuant to such
Securitization will not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code or (d) other
instruments which, if a Securitization has occurred, the REMIC Trust formed
pursuant to such Securitization will not fail to maintain its status as a "real
estate mortgage investment conduit" within the meaning of Section 860D of the
Code and which will not result in a downgrade, withdrawal or qualification of
the ratings for the Securities or any class thereof issued in connection with a
Securitization which are then outstanding.
"WALGREEN" shall mean Walgreen Eastern Co., Inc.
"YIELD MAINTENANCE DEFAULT PREMIUM" shall mean an amount equal
to the greater of (a) five percent (5%) of the outstanding principal balance of
the Loan to be prepaid or satisfied and (b) the Defeasance Payment Amount that
would be required if a Defeasance Event were to occur at such time (whether or
not then permitted) in an amount equal to the outstanding principal amount of
the Loan to be prepaid or satisfied.
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"YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the
greater of (a) one percent (1%) of the outstanding principal of the Loan to be
prepaid or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the Note
assuming that all outstanding principal and interest on the Loan is paid on the
Maturity Date (with each such payment and assumed payment discounted to its
present value at the date of prepayment at the rate which, when compounded
monthly, is equivalent to the Prepayment Rate when compounded semi-annually and
deducting from the sum of such present values any short-term interest paid from
the date of prepayment to the next succeeding Payment Date in the event such
payment is not made on a Payment Date), over (ii) the principal amount being
prepaid.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION. All references to
sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified. All uses of the word "including" shall mean
"including, without limitation" unless the context shall indicate otherwise.
Unless otherwise specified, the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.
II. GENERAL TERMS
SECTION 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the
terms and conditions set forth herein, Lender hereby agrees to make and Borrower
hereby agrees to accept the Loan on the Closing Date.
2.1.2 SINGLE DISBURSEMENT TO BORROWER. Borrower may request
and receive only one (1) borrowing hereunder in respect of the Loan and any
amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed.
2.1.3 THE NOTE, MORTGAGE AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Note and secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the
Loan to (a) acquire the Property or repay and discharge any existing loans
relating to the Property, (b) pay all past-due Basic Carrying Costs, if any,
with respect to the Property, (c) make deposits into the Reserve Funds on the
Closing Date in the amounts provided herein, (d) pay costs and expenses incurred
in connection with the closing of the Loan, as approved by Lender, (e) fund any
working capital requirements of the Property and (f) distribute the balance, if
any, to Borrower.
SECTION 2.2 INTEREST RATE.
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2.2.1 INTEREST RATE. Interest on the outstanding principal
balance of the Loan shall accrue from (and include) the Closing Date to but
excluding the Maturity Date at the Interest Rate.
2.2.2 INTEREST CALCULATION. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year by (c) the
outstanding principal balance.
2.2.3 DEFAULT RATE. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal balance of the Loan and, to the extent permitted by law, all accrued
and unpaid interest in respect of the Loan and any other amounts due pursuant to
the Loan Documents, shall accrue interest at the Default Rate, calculated from
the date such payment was due without regard to any grace or cure periods
contained herein.
2.2.4 USURY SAVINGS. This Agreement, the Note and the other
Loan Documents are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance of
the Loan at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the Maximum Legal Rate. If, by the
terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate
shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
SECTION 2.3 LOAN PAYMENT.
2.3.1 MONTHLY DEBT SERVICE PAYMENTS. Borrower shall pay to
Lender (a) on the Closing Date, an amount equal to interest only on the
outstanding principal balance of the Loan from the Closing Date up to and
including December 31, 2005 and (b) on each Payment Date thereafter up to and
including the Maturity Date, Borrower shall make a payment to Lender of
principal and interest in an amount equal to the Monthly Debt Service Payment
Amount, which payments shall be applied first to accrued and unpaid interest and
the balance to principal.
2.3.2 PAYMENTS GENERALLY. The first (1st) interest accrual
period hereunder shall commence on and include the Closing Date and shall end on
and include December 31, 2005. Each interest accrual period thereafter shall
commence on the first (1st) day of each calendar month during the term of this
Agreement and shall end on and include the final calendar date of such calendar
month. For purposes of making payments hereunder, but not for purposes of
calculating interest accrual periods, if the day on which such payment is due is
not a Business Day, then amounts due on such date shall be due on the
immediately preceding Business Day and with respect to payments of principal due
on the Maturity Date, interest shall be payable at the Interest Rate or the
Default Rate, as the case may be, through and including the day immediately
preceding such Maturity Date. All amounts due under this Agreement and the other
Loan Documents shall be payable without setoff, counterclaim, defense or any
other deduction whatsoever.
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2.3.3 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender
on the Maturity Date the outstanding principal balance of the Loan, all accrued
and unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or any
other sums due under the Loan Documents (including the amounts due on the
Maturity Date) are not paid by Borrower on or prior to the date on which it is
due, Borrower shall pay to Lender upon demand an amount equal to the lesser of
five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgage and the other Loan
Documents to the extent permitted by applicable law.
2.3.5 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 11:00 A.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office or as
otherwise directed by Lender, and any funds received by Lender after such time
shall, for all purposes hereof, be deemed to have been paid on the next
succeeding Business Day.
SECTION 2.4 PREPAYMENTS.
2.4.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided in
this Section 2.4.1 and Section 2.4.2, Borrower shall not have the right to
prepay the Loan in whole or in part prior to the Maturity Date. If for any
reason Borrower prepays the Loan on a date other than a Payment Date, Borrower
shall pay Lender, in addition to the Debt, all interest which would have accrued
on the amount of the Loan through and including the Payment Date next occurring
following the date of such prepayment. Notwithstanding anything to the contrary
contained herein, commencing on the Payment Date two (2) months prior to the
Maturity Date, or on any Payment Date thereafter (or on after date thereafter,
provided that interest is paid through the next Payment Date), Borrower may, at
its option, prepay the Debt in whole or in part without payment of the Yield
Maintenance Premium.
2.4.2 MANDATORY PREPAYMENTS. On the next occurring Payment
Date following the date on which Lender actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower for the
Restoration of the Property or otherwise remit such Net Proceeds to Borrower
pursuant to Section 6.4 hereof, Borrower shall prepay or authorize Lender to
apply Net Proceeds as a prepayment of all or a portion of the outstanding
principal balance of the Loan together with accrued interest and any other sums
due hereunder in an amount equal to one hundred percent (100%) of such Net
Proceeds; provided, however, if an Event of Default has occurred and is
continuing, Lender may apply such Net Proceeds to the Debt (until paid in full)
in any order or priority in its sole discretion. Other than following an Event
of Default, no Yield Maintenance Premium shall be due in connection with any
prepayment made pursuant to this Section 2.4.2.
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2.4.3 PREPAYMENTS AFTER DEFAULT. If following an Event of
Default, payment of all or any part of the Debt is tendered by Borrower or
otherwise recovered by Lender, such tender or recovery shall be (a) made on the
next occurring Payment Date together with the Monthly Debt Service Payment and
(b) deemed a voluntary prepayment by Borrower in violation of the prohibition
against prepayment set forth in Section 2.4.1 hereof and Borrower shall pay, in
addition to the Debt, an amount equal to the Yield Maintenance Default Premium.
2.4.4 PREPAYMENT PRIOR TO DEFEASANCE EXPIRATION DATE. If the
Permitted Release Date has occurred but the Defeasance Expiration Date has not
occurred, the Debt may be prepaid in whole (but not in part) prior to the date
permitted under Section 2.4.1 hereof upon not less than thirty (30) days prior
written notice to Lender specifying the Payment Date on which prepayment is to
be made (a "PREPAYMENT DATE") provided no Event of Default exists and upon
payment of an amount equal to the greater of (a) the Yield Maintenance Premium
and (b) one percent (1%) of the outstanding principal balance of the Loan as of
the Prepayment Date. Lender shall notify Borrower of the amount and the basis of
determination of the required prepayment consideration. If any notice of
prepayment is given, the Debt shall be due and payable on the Prepayment Date.
Lender shall not be obligated to accept any prepayment of the Debt unless it is
accompanied by the prepayment consideration due in connection therewith. If for
any reason Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest which would
have accrued on the amount of the Loan through and including the Payment Date
next occurring following the date of such prepayment.
SECTION 2.5 DEFEASANCE.
2.5.1 VOLUNTARY DEFEASANCE. (a) Provided no Event of Default
shall then exist, Borrower shall have the right at any time after the Defeasance
Expiration Date and prior to the date voluntarily prepayments are permitted
under Section 2.4.1 hereof to voluntarily defease all, but not part, of the Loan
by and upon satisfaction of the following conditions (such event being a
"DEFEASANCE EVENT"):
(i) Borrower shall provide not less than thirty (30)
days prior written notice to Lender specifying the Payment
Date (the "DEFEASANCE DATE") on which the Defeasance Event is
to occur;
(ii) Borrower shall pay to Lender all accrued and unpaid
interest on the principal balance of the Loan to and including
the Defeasance Date. If for any reason the Defeasance Date is
not a Payment Date, the Borrower shall also pay interest that
would have accrued on the Note through and including the
Payment Date immediately preceding the next Payment Date,
provided, however, if the Defeasance Deposit shall include
short-term interest computed from the date of such prepayment
through to the next succeeding Payment Date, Borrower shall
not be required to pay such short term interest pursuant to
this sentence;
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(iii) Borrower shall pay to Lender all other sums, not
including scheduled interest or principal payments, then due
under the Note, this Agreement, the Mortgage and the other
Loan Documents;
(iv) Borrower shall pay to Lender the required
Defeasance Deposit for the Defeasance Event;
(v) Borrower shall execute and deliver a pledge and
security agreement, in form and substance that would be
reasonably satisfactory to a prudent lender creating a first
priority lien on the Defeasance Deposit and the U.S.
Obligations purchased with the Defeasance Deposit in
accordance with the provisions of this Section 2.5 (the
"Security Agreement");
(vi) Borrower shall deliver an opinion of counsel for
Borrower that is standard in commercial lending transactions
and subject only to customary qualifications, assumptions and
exceptions opining, among other things, that Borrower has
legally and validly transferred and assigned the U.S.
Obligations and all obligations, rights and duties under and
to the Note to the Successor Borrower, that Lender has a
perfected first priority security interest in the Defeasance
Deposit and the U.S. Obligations delivered by Borrower and
that any REMIC Trust formed pursuant to a Securitization will
not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the
Code as a result of such Defeasance Event;
(vii) Borrower shall deliver confirmation in writing
from each of the applicable Rating Agencies to the effect that
such release will not result in a downgrade, withdrawal or
qualification of the respective ratings in effect immediately
prior to such Defeasance Event for the Securities issued in
connection with the Securitization which are then outstanding.
If required by the applicable Rating Agencies, Borrower shall
also deliver or cause to be delivered an Additional Insolvency
Opinion with respect to the Successor Borrower in form and
substance satisfactory to Lender and the applicable Rating
Agencies;
(viii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section
2.5.1(a) have been satisfied;
(ix) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the
U.S. Obligations purchased with the Defeasance Deposit
generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;
(x) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
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(xi) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including
(A) any costs and expenses associated with a release of the
Lien of the Mortgage as provided in Section 2.6 hereof, (B)
reasonable attorneys' fees and expenses incurred in connection
with the Defeasance Event, (C) the costs and expenses of the
Rating Agencies, (D) any revenue, documentary stamp or
intangible taxes or any other tax or charge due in connection
with the transfer of the Note, or otherwise required to
accomplish the defeasance and (E) the costs and expenses of
Servicer and any trustee, including reasonable attorneys'
fees.
(b) In connection with the Defeasance Event, Borrower shall
use the Defeasance Deposit to purchase U.S. Obligations which provide payments
on or prior to, but as close as possible to, all successive scheduled Payment
Dates after the Defeasance Date upon which interest and principal payments are
required under this Agreement and the Note, and in amounts equal to the
scheduled payments due on such Payment Dates under this Agreement and the Note
(including, without limitation, scheduled payments of principal, interest,
servicing fees (if any), and any other amounts due under the Loan Documents on
such Payment Dates) and assuming the Note is prepaid in full on the Anticipated
Repayment Date (the "Scheduled Defeasance Payments"). Borrower, pursuant to the
Security Agreement or other appropriate document, shall authorize and direct
that the payments received from the U.S. Obligations may be made directly to the
Lockbox Account (unless otherwise directed by Lender) and applied to satisfy the
Debt Service obligations of Borrower under this Agreement and the Note. Any
portion of the Defeasance Deposit in excess of the amount necessary to purchase
the U.S. Obligations required by this Section 2.5 and satisfy Borrower's other
obligations under this Section 2.5 and Section 2.6 shall be remitted to
Borrower.
2.5.2 COLLATERAL. Each of the U.S. Obligations that are part
of the defeasance collateral shall be duly endorsed by the holder thereof as
directed by Lender or accompanied by a written instrument of transfer in form
and substance that would be satisfactory to a prudent lender (including, without
limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution) in order to perfect upon the delivery of the defeasance
collateral a first priority security interest therein in favor of Lender in
conformity with all applicable state and federal laws governing the granting of
such security interests.
2.5.3 SUCCESSOR BORROWER. In connection with any Defeasance
Event, Borrower shall establish a successor entity (the "SUCCESSOR BORROWER")
designated by Lender in its sole discretion, which shall be a Special Purpose
Entity, which shall not own any other assests or have any other liabilities or
operate other property (except in connection with other defeased loans held in
the same securitized loan pool with the Loan). Borrower shall transfer and
assign all obligations, rights and duties under and to the Note, together with
the pledged U.S. Obligations to such Successor Borrower. Such Successor Borrower
shall assume the obligations under the Note and the Security Agreement and
Borrower shall be relieved of its obligations under such documents. Borrower
shall pay One Thousand and 00/100 Dollars ($1,000) to any such Successor
Borrower as consideration for assuming the obligations under the Note and the
Security Agreement. Notwithstanding anything in this Agreement to the contrary,
no other assumption fee shall be payable upon a transfer of the Note in
accordance with this Section 2.5.3, but Borrower shall pay all costs and
expenses incurred by Lender, including Lender's attorneys' fees and expenses and
any fees and expenses of any Rating Agencies, incurred in connection therewith.
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SECTION 2.6 RELEASE OF PROPERTY. Except as set forth in this
Section 2.6, no repayment, prepayment or defeasance of all or any portion of the
Loan shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Mortgage on the Property.
2.6.1 RELEASE OF PROPERTY.
(a) If Borrower has elected to defease the entire Loan and the
requirements of Section 2.5 and this Section 2.6 have been satisfied, all of the
Property shall be released from the Lien of the Mortgage and the U.S.
Obligations, pledged pursuant to the Security Agreement, shall be the sole
source of collateral securing the Note.
(b) In connection with the release of the Mortgage, Borrower
shall submit to Lender, not less than thirty (30) days prior to the Defeasance
Date, a release of Lien (and related Loan Documents) for the Property for
execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Property is located and that would be satisfactory to
a prudent lender and contains standard provisions, if any, protecting the rights
of the releasing lender . In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such releases in accordance with the terms of this Agreement.
2.6.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of all
principal and interest due on the Loan and all other amounts due and payable
under the Loan Documents in accordance with the terms and provisions of the Note
and this Agreement, release the Lien of the Mortgage on the Property.
SECTION 2.7 LOCKBOX ACCOUNT/CASH MANAGEMENT.
2.7.1 LOCKBOX ACCOUNT/CASH MANAGEMENT. (a) During the term of
the Loan, Borrower shall establish and maintain an account (the "LOCKBOX
ACCOUNT") with Lockbox Bank in trust for the benefit of Lender, which Lockbox
Account shall be under the sole dominion and control of Lender. The Lockbox
Account shall be entitled "RP Elmwood Associates, L.P., as Borrower and Bear
Stearns Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement dated
as of December 9, 2005 - Lockbox Account". Borrower hereby grants to Lender a
first-priority security interest in the Lockbox Account and all deposits at any
time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Lockbox Account, including, without limitation, executing and
filing UCC-1 Financing Statements and continuations thereof. Lender and Servicer
shall have the sole right to make withdrawals from the Lockbox Account and all
costs and expenses for establishing and maintaining the Lockbox Account shall be
paid by Borrower. All monies now or hereafter deposited into the Lockbox Account
shall be deemed additional security for the Debt.
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(b) Borrower shall, or shall cause Manager, if any, to,
deliver irrevocable written instructions to all tenants under Leases to deliver
all Rents payable thereunder directly to the Lockbox Account. Borrower shall,
and shall cause Manager, if any, to, deposit all amounts received by Borrower or
Manager, if any, constituting Rents into the Lockbox Account within one (1)
Business Day after receipt thereof.
(c) Borrower shall obtain from Lockbox Bank its agreement to
transfer to the Cash Management Account in immediately available funds by
federal wire transfer all amounts on deposit in the Lockbox Account once every
Business Day throughout the term of the Loan.
(d) Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in the Lockbox Account to the payment of the Debt in any order
in its sole discretion.
(e) The Lockbox Account shall be an Eligible Account and shall
not be commingled with other monies held by Borrower or Lockbox Bank.
(f) Borrower shall not further pledge, assign or grant any
security interest in the Lockbox Account or the monies deposited therein or
permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto.
(g) Borrower shall indemnify Lender and hold Lender harmless
from and against any and all actions, suits, claims, demands, liabilities,
losses, damages, obligations and costs and expenses (including litigation costs
and reasonable attorneys fees and expenses) arising from or in any way connected
with the Lockbox Account and/or the Lockbox Agreement (unless arising from the
gross negligence or willful misconduct of Lender) or the performance of the
obligations for which the Lockbox Account was established.
2.7.2 CASH MANAGEMENT ACCOUNT. (a) During the term of the
Loan, Borrower shall establish and maintain a segregated Eligible Account (the
"CASH MANAGEMENT ACCOUNT") to be held by Agent in trust and for the benefit of
Lender, which Cash Management Account shall be under the sole dominion and
control of Lender. The Cash Management Account shall be entitled "RP Elmwood
Associates, L.P., as Borrower and Bear Stearns Commercial Mortgage, Inc., as
Lender, pursuant to Loan Agreement dated as of December 9, 2005 - Cash
Management Account." Borrower hereby grants to Lender a first priority security
interest in the Cash Management Account and all deposits at any time contained
therein and the proceeds thereof and will take all actions necessary to maintain
in favor of Lender a perfected first priority security interest in the Cash
Management Account, including, without limitation, executing and filing UCC-1
Financing Statements and continuations thereof. Borrower will not in any way
alter or modify the Cash Management Account and will notify Lender of the
account number thereof. Lender and Servicer shall have the sole right to make
withdrawals from the Cash Management Account and all costs and expenses for
establishing and maintaining the Cash Management Account shall be paid by
Borrower.
(b) The insufficiency of funds on deposit in the Cash
Management Account shall not relieve Borrower from the obligation to make any
payments, as and when due pursuant to this Agreement and the other Loan
Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.
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(c) All funds on deposit in the Cash Management Account
following the occurrence of an Event of Default may be applied by Lender in such
order and priority as Lender shall determine.
(d) Borrower hereby agrees that Lender may modify the Cash
Management Agreement for the purpose of establishing additional sub-accounts in
connection with any payments otherwise required under this Agreement and the
other Loan Documents and Lender shall provide notice thereof to Borrower.
2.7.3 PAYMENTS RECEIVED UNDER THE CASH MANAGEMENT AGREEMENT.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the payment of the Monthly
Debt Service Payment Amount and amounts required to be deposited into the
Reserve Funds, if any, shall be deemed satisfied to the extent sufficient
amounts are deposited in the Cash Management Account to satisfy such obligations
pursuant to the Cash Management Agreement on the dates each such payment is
required, regardless of whether any of such amounts are so applied by Lender.
III. CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower or
waiver by Lender of the following conditions precedent no later than the Closing
Date:
3.1.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS. The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and no Default or an 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.
3.1.2 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.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES.
(a) MORTGAGE, ASSIGNMENT OF LEASES. Lender shall have received
from Borrower fully executed and acknowledged counterparts of the Mortgage and
the Assignment of Leases and evidence that counterparts of the Mortgage and
Assignment of Leases have been delivered to the title company for recording, in
the reasonable judgment of Lender, so as to effectively create upon such
recording valid and enforceable Liens upon the Property, of the requisite
priority, in favor of Lender or Lender's nominee (or such other trustee as may
be required or desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents. Lender shall have also received from Borrower fully executed
counterparts of the other Loan Documents.
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(b) TITLE INSURANCE. Lender shall have received the Title
Insurance Policy issued by a title company acceptable to Lender and dated as of
the Closing Date, with reinsurance and direct access agreements acceptable to
Lender. Such Title Insurance Policy shall (i) provide coverage in amounts
satisfactory to Lender, (ii) insure Lender that the Mortgage creates a valid
lien on the Property of the requisite priority, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender as the insured. The Title Insurance Policy shall
be assignable. Lender also shall have received evidence that all premiums in
respect of such Title Insurance Policy have been paid.
(c) SURVEY. Lender shall have received a current title survey
for the Property, certified to the title company and Lender and their successors
and assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the Accuracy Standards for ALTA/ACSM Land Title Surveys as
adopted by American Land Title Association, American Congress on Surveying &
Mapping and National Society of Professional Surveyors in 1999. The survey shall
reflect the same legal description contained in the Title Insurance Policy
referred to in clause (b) above and shall include, among other things, a metes
and bounds description of the real property comprising part of the Property
reasonably satisfactory to Lender. The surveyor's seal shall be affixed to the
survey and the surveyor shall provide a certification for the survey in form and
substance acceptable to Lender.
(d) INSURANCE. Lender shall have received valid certificates
of insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) ENVIRONMENTAL REPORTS. Lender shall have received a Phase
I environmental report (and, if recommended by the Phase I environmental report,
a Phase II environmental report) in respect of the Property, in each case
satisfactory in form and substance to Lender.
(f) ZONING. Lender shall have received, at Lender's option,
(i) letters or other evidence with respect to the Property from the appropriate
municipal authorities (or other Persons) concerning applicable zoning and
building laws, and (ii) either (A) an ALTA 3.1 zoning endorsement for the
applicable Title Insurance Policy or (B) a zoning opinion letter, in each case
in substance reasonably satisfactory to Lender.
(g) 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, subject
only to applicable Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents, and Lender shall have received satisfactory
evidence thereof.
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3.1.4 RELATED DOCUMENTS. Each additional document not
specifically referenced herein, but relating to the transactions contemplated
herein, shall be in form and substance reasonably satisfactory to Lender, and
shall have been duly authorized, executed and delivered by all parties thereto
and Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Lender copies
certified by 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, without
limitation, amendments (as requested by Lender), 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.
3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have
received opinions from Borrower's counsel (a) the Insolvency Opinion, and (b)
with respect to due execution, authority, enforceability of the Loan Documents
and such other matters as Lender may require, all such opinions in form, scope
and substance satisfactory to Lender and Lender's counsel in their sole
discretion.
3.1.7 BUDGETS. Borrower shall have delivered, and Lender shall
have approved, the Annual Budget for the current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Borrower shall have paid all Basic
Carrying Costs relating to the Property which are in arrears, including without
limitation, (a) accrued but unpaid Insurance Premiums due pursuant to the
Policies, (b) currently due Taxes (including any in arrears) relating to the
Property, and (c) currently due Other Charges relating to the Property, which
amounts shall be funded with proceeds of the Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All organizational 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.
3.1.10 PAYMENTS. All payments, deposits or escrows required to
be made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.
3.1.11 TENANT ESTOPPELS. Lender shall have received an
executed tenant estoppel letter, which shall be in form and substance
satisfactory to Lender, from (a) each tenant identified by Lender as an "anchor
tenant" of the Property, (b) each tenant leasing an entire building at the
Property, (c) each tenant paying base rent in an amount equal to or exceeding
five percent (5%) of the Gross Income from Operations from the Property occupied
by such tenant and (d) disregarding the area leased by those described in
clauses (a), (b) and (c), lessees of not less than seventy-five percent (75%) of
the remaining gross leasable area of the Property.
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3.1.12 TRANSACTION COSTS. Borrower shall have paid or
reimbursed Lender for all title insurance premiums, recording and filing fees,
costs of environmental reports, Physical Conditions Report, appraisals and other
reports, the fees and costs of Lender's counsel and all other third party
out-of-pocket expenses incurred in connection with the origination and closing
of the Loan.
3.1.13 MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the financial condition or business condition of
Borrower, Principal, Guarantor or the Property since the date of the most recent
financial statements delivered to Lender. The income and expenses of the
Property, the occupancy thereof, and all other features of the transaction shall
be as represented to Lender without material adverse change. Neither Borrower,
Principal, Guarantor nor any of their respective constituent Persons shall be
the subject of any bankruptcy, reorganization, or insolvency proceeding.
3.1.14 LEASES AND RENT ROLL. Lender shall have received copies
of all tenant leases, which tenant leases shall be certified by Borrower as
being true, correct and complete and certified copies of all ground leases
affecting the Property, if any. Lender shall have received a current certified
rent roll of the Property, reasonably satisfactory in form and substance to
Lender.
3.1.15 SUBORDINATION AND ATTORNMENT. Lender shall have
received appropriate instruments acceptable to Lender subordinating all of the
Leases designated by Lender to the Mortgage. Lender shall have received an
agreement to attorn to Lender satisfactory to Lender from any tenant under a
Lease that does not provide for such attornment by its terms.
3.1.16 TAX LOT. Lender shall have received evidence that the
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 PHYSICAL CONDITIONS REPORT. Lender shall have received
a Physical Conditions Report with respect to the Property, which report shall be
issued by an engineer selected by Lender and shall be reasonably satisfactory in
form and substance to Lender.
3.1.18 INTENTIONALLY OMITTED.
3.1.19 APPRAISAL. Lender shall have received an appraisal of
the Property, from an appraiser selected by Lender, which appraisal shall be
satisfactory in form and substance to Lender.
3.1.20 FINANCIAL STATEMENTS. Lender shall have received a
balance sheet with respect to the Property for the two (2) most recent Fiscal
Years and statements of income and statements of cash flows with respect to the
Property for the three (3) most recent Fiscal Years, each in form and substance
satisfactory to Lender.
3.1.21 FURTHER DOCUMENTS. Lender or its counsel shall have
received such other documents and further approvals, opinions, documents and
information as Lender or its counsel may have reasonably requested including the
Loan Documents in form and substance satisfactory to Lender and its counsel.
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IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 BORROWER REPRESENTATIONS. Borrower represents and
warrants as of the date hereof and as of the Closing Date that:
4.1.1 ORGANIZATION. Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its properties and to transact the businesses in which it is now engaged.
Borrower 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. Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Property. The ownership interests in Borrower are as set forth on the
organizational chart attached hereto as Schedule III.
4.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, management agreement or other
agreement or instrument to which Borrower is a party or by which any of
Borrower's property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or any of
Borrower's properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any court or any such
Governmental Authority required for the execution, delivery and performance by
Borrower of this Agreement or any other Loan Documents has been obtained and is
in full force and effect.
4.1.4 LITIGATION. There are no actions, suits or proceedings
at law or in equity by or before any Governmental Authority or other agency now
pending or threatened against or affecting Borrower, Guarantor, Principal or the
Property, which actions, suits or proceedings, if determined against Borrower,
Guarantor, Principal or the Property, might materially adversely affect the
condition (financial or otherwise) or business of Borrower, Guarantor, Principal
or the condition or ownership of the Property.
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4.1.5 AGREEMENTS. Borrower is not a party to any agreement or
instrument or subject to any restriction which might materially and adversely
affect Borrower or the Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower 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 agreement or instrument to
which it is a party or by which Borrower or the Property is bound. Borrower has
no material financial obligation under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which Borrower is a party or
by which Borrower or the Property is otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of the Property as permitted
pursuant to clause (xxiii) of the definition of "Special Purpose Entity" set
forth in Section 1.1 hereof and (b) obligations under the Loan Documents.
4.1.6 TITLE. Borrower has good, marketable and insurable fee
simple title to the real property comprising part of the Property and good title
to the balance of the Property, free and clear of all Liens whatsoever except
the Permitted Encumbrances, such other Liens as are permitted pursuant to the
Loan Documents and the Liens created by the Loan Documents. The Permitted
Encumbrances in the aggregate do not materially and adversely affect the value,
operation or use of the Property (as currently used) or Borrower's ability to
repay the Loan. The 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 (a) a valid, perfected first priority
lien on the Property, subject only to Permitted Encumbrances and the Liens
created by the Loan Documents and (b) 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 by the Loan Documents. There are no
claims for payment for work, labor or materials affecting the Property which are
or may become a Lien prior to, or of equal priority with, the Liens created by
the Loan Documents.
4.1.7 SOLVENCY. Borrower has (a) not entered into this
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for its obligations under such Loan
Documents. Giving effect to the Loan, the fair saleable value of Borrower's
assets exceeds and will, immediately following the making of the Loan, exceed
Borrower's total liabilities, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the making of the Loan, be
greater than Borrower's probable liabilities, including the maximum amount of
its contingent liabilities on its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately following the making of the
Loan will not, constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Borrower does not intend to, and
does not believe that it will, incur debt and liabilities (including contingent
liabilities and other commitments) beyond its ability to pay such debt and
liabilities as they mature (taking into account the timing and amounts of cash
to be received by Borrower and the amounts to be payable on or in respect of
obligations of Borrower). No petition in bankruptcy has been filed against
Borrower or any constituent Person in the last seven (7) years, and neither
Borrower nor any constituent Person in the last seven (7) years has ever made an
assignment for the benefit of creditors or taken advantage of any insolvency act
for the benefit of debtors. Neither Borrower nor any of its constituent Persons
are contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it or such
constituent Persons.
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4.1.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made
by Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.
4.1.9 NO PLAN ASSETS. Borrower does not sponsor, is not
obligated to contribute to, and is not itself an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of
the Code, and none of the assets of Borrower constitutes or will constitute
"plan assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101. In addition, (a) Borrower is not a "governmental plan" within the
meaning of Section 3(32) of ERISA and (b) transactions by or with Borrower are
not subject to any state or other statute , regulation or other restriction
regulating investments of, or fiduciary obligations with respect to,
governmental plans within the meaning of Section 3(32) of ERISA which is similar
to the provisions of Section 406 of ERISA or Section 4975 of the Code and which
prohibit or otherwise restrict the transactions contemplated by this Agreement,
including but not limited to the exercise by Lender of any of its rights under
the Loan Documents.
4.1.10 COMPLIANCE. Borrower and the Property and the use
thereof comply in all material respects with all applicable Legal Requirements,
including, without limitation, building and zoning ordinances and codes.
Borrower is not in default or violation of any order, writ, injunction, decree
or demand of any Governmental Authority. There has not been committed by
Borrower or any other Person in occupancy of or involved with the operation or
use of the Property any act or omission affording the federal government or any
other Governmental Authority the right of forfeiture as against the Property or
any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents.
4.1.11 FINANCIAL INFORMATION. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in connection with the Loan (i) are
true, complete and correct in all material respects, (ii) accurately represent
the financial condition of Borrower and the Property, as applicable, as of the
date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein. Except
for Permitted Encumbrances, Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or the
operation thereof as a shopping center, except as referred to or reflected in
said financial statements. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
37
4.1.12 CONDEMNATION. No Condemnation or other similar
proceeding has been commenced or, to Borrower's best knowledge, is threatened or
contemplated with respect to all or any portion of the Property or for the
relocation of roadways providing access to the Property.
4.1.13 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.
4.1.14 UTILITIES AND PUBLIC ACCESS. The Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Property for its intended uses. All
public utilities necessary or convenient to the full use and enjoyment of the
Property are located either in the public right-of-way abutting the Property
(which are connected so as to serve the Property without passing over other
property) or in recorded easements serving the Property and such easements are
set forth in and insured by the Title Insurance Policy. All roads necessary for
the use of the Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of ss.1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. The Property is comprised of one (1) or
more parcels which constitute a separate tax lot or lots and does not constitute
a portion of any other tax lot not a part of the Property.
4.1.17 ASSESSMENTS. There are no pending or proposed special
or other assessments for public improvements or otherwise affecting the
Property, nor are there any contemplated improvements to the Property that may
result in such special or other assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to
any right of rescission, set-off, counterclaim or defense by Borrower or
Guarantor, including the defense of usury, nor would the operation of any of the
terms of the Loan Documents, or the exercise of any right thereunder, render the
Loan Documents unenforceable (subject to principles of equity and bankruptcy,
insolvency and other laws generally affecting creditors' rights and the
enforcement of debtors' obligations), and neither Borrower nor Guarantor have
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto.
4.1.19 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.
4.1.20 INSURANCE. Borrower has obtained and has delivered to
Lender certified copies of the Policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. No claims have been
made or are currently pending, outstanding or otherwise remain unsatisfied under
any such Policy, and neither Borrower nor any other Person, has done, by act or
omission, anything which would impair the coverage of any such Policy.
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4.1.21 USE OF PROPERTY. The Property is used exclusively for
retail shopping center purposes and other appurtenant and related uses.
4.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required for the legal use, occupancy and
operation of the Property as a retail shopping center (collectively, the
"LICENSES"), have been obtained and are in full force and effect. Borrower shall
keep and maintain all Licenses necessary for the operation of the Property as a
retail shopping center with related retail uses. The use being made of the
Property is in conformity with the certificate of occupancy issued for the
Property.
4.1.23 FLOOD ZONE. None of the Improvements on the Property
are located in an area as identified by the Federal Emergency Management Agency
as an area having special flood hazards and, if so located, the flood insurance
required pursuant to Section 6.1(a)(i) is in full force and effect with respect
to the Property.
4.1.24 PHYSICAL CONDITION. The Property, including, without
limitation, 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 material respects; there exists no structural
or other material defects or damages in the Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
4.1.25 BOUNDARIES. All of the improvements which were included
in determining the appraised value of the Property lie wholly within the
boundaries and building restriction lines of the Property, and no improvements
on adjoining properties encroach upon the Property, and no easements or other
encumbrances upon the Property encroach upon any of the Improvements, so as to
affect the value or marketability of the Property except those which are insured
against by the Title Insurance Policy.
4.1.26 LEASES. The Property is not subject to any leases other
than the Leases described in the rent roll attached hereto as Schedule I and
made a part hereof. Borrower is the owner and lessor of landlord's interest in
the Leases. No Person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases. The
current Leases are in full force and effect and there are no defaults thereunder
by either party and there are no conditions that, with the passage of time or
the giving of notice, or both, would constitute defaults thereunder. No Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date. All work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any tenant has
already been received by such tenant. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein. No tenant listed on Schedule I has assigned its Lease or sublet all or
any portion of the premises demised thereby, no such tenant holds its leased
premises under assignment or sublease, nor does anyone except such tenant and
its employees occupy such leased premises. No tenant under any Lease has a right
39
or option pursuant to such Lease or otherwise to purchase all or any part of the
leased premises or the building of which the leased premises are a part. No
tenant under any Lease has any right or option for additional space in the
Improvements. No hazardous wastes or toxic substances, as defined by applicable
federal, state or local statutes, rules and regulations, have been disposed,
stored or treated by any tenant under any Lease on or about the leased premises
nor does Borrower have any knowledge of any tenant's intention to use its leased
premises for any activity which, directly or indirectly, involves the use,
generation, treatment, storage, disposal or transportation of any petroleum
product or any toxic or hazardous chemical, material, substance or waste.
4.1.27 SURVEY. The Survey for the Property delivered to Lender
in connection with this Agreement has been prepared in accordance with the
provisions of Section 3.1.3(c) hereof, and does not fail to reflect any material
matter affecting the Property or the title thereto.
4.1.28 INVENTORY. Borrower is the owner of all of the
Equipment, Fixtures and Personal Property (as such terms are defined in the
Mortgage) located on or at the Property and shall not lease any Equipment,
Fixtures or Personal Property other than as permitted hereunder. All of the
Equipment, Fixtures and Personal Property are sufficient to operate the Property
in the manner required hereunder and in the manner in which it is currently
operated.
4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Property to Borrower have been
paid. All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, have been paid, and, under current Legal
Requirements, the Mortgage is enforceable in accordance with its terms by Lender
(or any subsequent holder thereof), subject to principles of equity and
bankruptcy, insolvency and other laws generally applicable to creditors' rights
and the enforcement of debtors' obligations.
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS. (a) Until the Debt
has been paid in full, Borrower hereby represents, warrants and covenants that
(i) Borrower is, shall be and shall continue to be a Special Purpose Entity and
(ii) Principal is, shall be and shall continue to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in
Section 4.1.30(a) shall survive for so long as any amount remains payable to
Lender under this Agreement or any other Loan Document.
40
(c) All of the facts stated and all of the assumptions made in
the Insolvency Opinion, including, but not limited to, in any exhibits attached
thereto, are true and correct in all respects and all facts stated and all
assumptions made in any subsequent non-consolidation opinion required to be
delivered in connection with the Loan Documents (an "ADDITIONAL INSOLVENCY
OPINION"), including, but not limited to, any exhibits attached thereto, will
have been and shall be true and correct in all respects. Borrower has complied
and will comply with, and Principal has complied and Borrower will cause
Principal to comply with, all of the assumptions made with respect to Borrower
and Principal in the Insolvency Opinion. Borrower will have complied and will
comply with all of the assumptions made with respect to Borrower and Principal
in any Additional Insolvency Opinion. Each entity other than Borrower and
Principal with respect to which an assumption shall be made in any Additional
Insolvency Opinion will have complied and will comply with all of the
assumptions made with respect to it in any Additional Insolvency Opinion.
4.1.31 PROPERTY MANAGEMENT. As of the Closing Date, there is
no Management Agreement in effect with respect to, and no property management
fee is or will be owed or payable to any Person in connection with the
management of, the Property. The Property is managed solely by at will employees
of Borrower's affiliate (presently the Guarantor), and no Manager shall be
retained or appointed without the prior written consent of Lender. If such
consent is granted, (a) the Property will be managed at all times by such
Manager pursuant to a Management Agreement approved by Lender (unless terminated
as herein provided), and (b) Borrower shall (i) diligently perform all terms and
covenants of such Management Agreement, (ii) not surrender, terminate, cancel,
or materially modify such Management Agreement, (iii) not enter into any other
agreement relating to the management or operation of the Property with any other
Person, (iv) not consent to the assignment by such Manager of its interest under
such Management Agreement, or (v) not waive or release any of its rights and
remedies under such Management Agreement, in each case, without the consent of
Lender, which consent shall not be unreasonably withheld or delayed. If at any
time Lender consents to the appointment of a Manager, such Manager and Borrower
shall, as a condition to Lender's consent, execute a subordination of management
agreement in form and substance reasonably satisfactory to Lender.
4.1.32 ILLEGAL ACTIVITY. No portion of the Property has been
or will be purchased with proceeds of any illegal activity.
4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by and on behalf of Borrower to Lender and in all
financial statements, rent rolls (including the rent roll attached hereto as
Schedule I), reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects. There has been no material
adverse change in any condition, fact, circumstance or event that would make any
such information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects or might materially
and adversely affect the use, operation or value of the Property or the business
operations or the financial condition of Borrower. Borrower has disclosed to
Lender all material facts and has not failed to disclose any material fact that
could cause any Provided Information or representation or warranty made herein
to be materially misleading.
4.1.34 INVESTMENT COMPANY ACT. Borrower is not (a) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
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4.1.35 EMBARGOED PERSON. As of the date hereof and at all
times throughout the term of the Loan, including after giving effect to any
Transfers permitted pursuant to the Loan Documents, (a) none of the funds or
other assets of Borrower and Guarantor constitute property of, or are
beneficially owned, directly or indirectly, by any Embargoed Person; (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower or
Guarantor, as applicable, with the result that the investment in Borrower or
Guarantor, as applicable (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower or
Guarantor, as applicable, have been derived from any unlawful activity with the
result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law.
4.1.36 PRINCIPAL PLACE OF BUSINESS; STATE OF ORGANIZATION.
Borrower's principal place of business as of the date hereof is the address set
forth in the introductory paragraph of this Agreement. The Borrower is organized
under the laws of the State of Delaware.
4.1.37 LOAN TO VALUE. The maximum principal amount of the Loan
does not exceed eighty percent (80%) of the fair market value of the Property.
4.1.38 MORTGAGE TAXES. As of the date hereof, Borrower
represents that it has paid all state, county and municipal recording and all
other taxes imposed upon the execution and recordation of the Mortgage.
4.1.39 CASH MANAGEMENT ACCOUNT. Borrower hereby represents and
warrants to Lender that:
(a) This Agreement, together with the other Loan Documents,
create a valid and continuing security interest (as defined in the Uniform
Commercial Code of the State of New York) in the Lockbox Account and Cash
Management Account in favor of Lender, which security interest is prior to all
other Liens, other than Permitted Encumbrances, and is enforceable as such
against creditors of and purchasers from Borrower. Other than in connection with
the Loan Documents and except for Permitted Encumbrances, Borrower has not sold,
pledged, transferred or otherwise conveyed the Lockbox Account and Cash
Management Account;
(b) Each of the Lockbox Account and Cash Management Account
constitute "deposit accounts" and/or "securities accounts" within the meaning of
the Uniform Commercial Code of the State of New York);
(c) Pursuant and subject to the terms hereof and the other
applicable Loan Documents, the Lockbox Bank and Agent have agreed to comply with
all instructions originated by Lender, without further consent by Borrower,
directing disposition of the Lockbox Account and Cash Management Account and all
sums at any time held, deposited or invested therein, together with any interest
or other earnings thereon, and all proceeds thereof (including proceeds of sales
and other dispositions), whether accounts, general intangibles, chattel paper,
deposit accounts, instruments, documents or securities; and
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(d) The Lockbox Account and Cash Management Account are not in
the name of any Person other than Borrower, as pledgor, or Lender, as pledgee.
Borrower has not consented to the Lockbox Bank and Agent complying with
instructions with respect to the Lockbox Account and Cash Management Account
from any Person other than Lender.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that
all of the representations and warranties of Borrower set forth in Section 4.1
hereof and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any amount remains owing to Lender under this Agreement
or any of the other Loan Documents by Borrower. 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. BORROWER COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS. From the date hereof and
until payment and performance in full of all obligations of Borrower under the
Loan Documents or the earlier release of the Lien of the Mortgage encumbering
the Property (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS. 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 with all Legal Requirements applicable to it and the Property. There
shall never be committed by Borrower, and Borrower shall never permit any other
Person in occupancy of or involved with the operation or use of the Property to
commit any act or omission affording the federal government or any state or
local government the right of forfeiture against the Property or any part
thereof or any monies paid in performance of Borrower's obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to commit, permit
or suffer to exist any act or omission affording such right of forfeiture.
Borrower shall at all times maintain, preserve and protect all franchises and
trade names and preserve all the remainder of its property used or useful in the
conduct of its business and shall keep the Property in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as more fully provided in the Mortgage. Borrower shall keep the Property
insured at all times by financially sound and reputable insurers, to such extent
and against such risks, and maintain liability and such other insurance, as is
more fully provided in this Agreement. Borrower shall operate the Property in
accordance with the terms and provisions of the O&M Agreement in all material
respects. After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding promptly initiated and conducted in
good faith and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to Borrower or the Property or any
alleged violation of any Legal Requirement, provided that (i) no Default or
Event of Default has occurred and remains uncured; (ii) Borrower is permitted to
do so under the provisions of any mortgage or deed of trust superior in lien to
the Mortgage; (iii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any instrument to which Borrower is subject
and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable statutes, laws and ordinances; (iv)
neither the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, cancelled or lost; (v) Borrower shall
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promptly upon final determination thereof comply with any such Legal Requirement
determined to be valid or applicable or cure any violation of any Legal
Requirement; (vi) such proceeding shall suspend the enforcement of the contested
Legal Requirement against Borrower or the Property; and (vii) Borrower shall
furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith. Lender may
apply any such security, as necessary to cause compliance with such Legal
Requirement at any time when, in the reasonable judgment of Lender, the
validity, applicability or violation of such Legal Requirement is finally
established or the Property (or any part thereof or interest therein) shall be
in danger of being sold, forfeited, terminated, cancelled or lost.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes
and Other Charges now or hereafter levied or assessed or imposed against the
Property or any part thereof as the same become due and payable; provided,
however, Borrower's obligation to directly pay Taxes shall be suspended for so
long as Borrower complies with the terms and provisions of Section 7.2 hereof.
Borrower will deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid or are
not then delinquent no later than ten (10) days prior to the date on which the
Taxes and/or Other Charges would otherwise be delinquent if not paid. Borrower
shall furnish to Lender receipts for the payment of the Taxes and the Other
Charges prior to the date the same shall become delinquent (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 7.2 hereof).
Borrower shall not suffer and shall promptly cause to be paid and discharged any
Lien or charge whatsoever which may be or become a Lien or charge against the
Property, and shall promptly pay for all utility services provided to the
Property. After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no Default or
Event of Default has occurred and remains uncured; (ii) Borrower is permitted to
do so under the provisions of any mortgage or deed of trust superior in lien to
the Mortgage; (iii) 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 and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iv) neither the Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (v) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (vi) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the Property; and (vii)
Borrower shall furnish such security as may be required in the proceeding, or as
may be requested by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. 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 established or the Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost or
there shall be any danger of the Lien of the Mortgage being primed by any
related Lien.
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5.1.3 LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower and/or Guarantor which might materially adversely affect
Borrower's or Guarantor's condition (financial or otherwise) or business or the
Property.
5.1.4 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender
of any material adverse change in Borrower's condition, financial or otherwise,
or of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 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.
5.1.7 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 executed and delivered by, or applicable to, Borrower.
5.1.8 AWARD AND INSURANCE BENEFITS. Borrower shall cooperate
with Lender in obtaining for Lender the benefits of any Awards or Insurance
Proceeds lawfully or equitably payable in connection with the Property, and
Lender shall be reimbursed for any expenses incurred in connection therewith
(including attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of Casualty or Condemnation
affecting the Property or any part thereof) out of such Insurance Proceeds.
5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's sole
cost and expense:
(a) 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 which are reasonably
requested by Lender in connection therewith;
(b) 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 collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
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(c) 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.
5.1.10 PRINCIPAL PLACE OF BUSINESS, STATE OF ORGANIZATION.
Borrower will not cause or permit any change to be made in its name, identity
(including its trade name or names), place of organization or formation (as set
forth in Section 4.1.36 hereof) or Borrower's corporate or partnership structure
unless Borrower shall have first notified Lender in writing of such change at
least thirty (30) days prior to the effective date of such change, and shall
have first taken all action required by Lender for the purpose of perfecting or
protecting the lien and security interests of Lender pursuant to this Agreement,
the Cash Management Agreement and the other Loan Documents and, in the case of a
change in Borrower's structure, without first obtaining the prior consent of
Lender. Upon Lender's request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender's security interest in the
Property as a result of such change of principal place of business or place of
organization. Borrower's principal place of business and chief executive office,
and the place where Borrower keeps its books and records, including recorded
data of any kind or nature, regardless of the medium or recording, including
software, writings, plans, specifications and schematics, has been for the
preceding four months (or, if less, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth at the
introductory paragraph of this Agreement (unless Borrower notifies Lender in
writing at least thirty (30) days prior to the date of such change). Borrower's
organizational identification number, if any, assigned by the state of
incorporation or organization is correctly set forth in the introductory
paragraph of this Agreement. Borrower shall promptly notify Lender of any change
in its organizational identification number. If Borrower does not now have an
organizational identification number and later obtains one, Borrower promptly
shall notify Lender of such organizational identification number.
5.1.11 FINANCIAL REPORTING. (a) Borrower will keep and
maintain or will cause to be kept and maintained on a Fiscal Year basis, in
accordance with GAAP (or such other accounting basis acceptable to Lender),
proper and accurate books, records and accounts reflecting all of the financial
affairs of Borrower and all items of income and expense in connection with the
operation of the Property. Lender shall have the right from time to time at all
times during normal business hours upon reasonable notice to examine such books,
records and accounts at the office of Borrower or any 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 Borrower's accounting
records with respect to the Property, as Lender shall determine to be necessary
or appropriate in the protection of Lender's interest. Upon Lender's reasonable
request, Borrower shall deliver to Lender such other information necessary and
sufficient to fairly represent the financial condition of Borrower and the
Property.
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(b) Borrower will furnish to Lender annually, within one
hundred twenty (120) days following the end of each Fiscal Year of Borrower, a
complete internal copy of Borrower's annual (unaudited) financial statements
covering the Property for such Fiscal Year and containing statements of profit
and loss for Borrower and the Property and a balance sheet for Borrower. Such
statements shall set forth the financial condition and the results of operations
for the Property for such Fiscal Year, and shall include, but not be limited to,
amounts representing annual Net Cash Flow, Net Operating Income, Gross Income
from Operations and Operating Expenses. Borrower's annual financial statements
shall be accompanied by (i) a comparison of the budgeted income and expenses and
the actual income and expenses for the prior Fiscal Year and (ii) an Officer's
Certificate stating that each such annual financial statement presents fairly
the financial condition and the results of operations of Borrower and the
Property being reported upon and has been prepared in accordance with GAAP.
Together with Borrower's annual financial statements, Borrower shall furnish to
Lender an Officer's Certificate certifying as of the date thereof whether there
exists an event or circumstance which constitutes a Default or Event of Default
under the Loan Documents executed and delivered by, or applicable to, Borrower,
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.
(c) Borrower will furnish, or cause to be furnished, to Lender
on or before thirty (30) days after the end March, June, September and December
throughout the term of the Loan the following items, accompanied by an Officer's
Certificate stating that such items are true, correct, accurate, and complete
and fairly present the financial condition and results of the operations of
Borrower and the Property (subject to normal year-end adjustments) as
applicable: (i) monthly and year-to-date operating statements (including Capital
Expenditures) prepared for each calendar month, noting Net Operating Income,
Gross Income from Operations, and Operating Expenses (not including any
contributions to the Replacement Reserve Fund and the Required Repair Fund), and
other information necessary and sufficient to fairly represent the financial
position and results of operation of the Property during such calendar month,
and containing a comparison of budgeted income and expenses and the actual
income and expenses together with a detailed explanation of any variances of
five percent (5%) or more between budgeted and actual amounts for such periods
for an individual items in excess of $5,000, all in form satisfactory to Lender;
(ii) a calculation reflecting the annual Debt Service Coverage Ratio for the
immediately preceding twelve (12) month period as of the last day of such month
accompanied by an Officers' Certificate with respect thereto; and (iii) a Net
Cash Flow Schedule. In addition, such Officer's Certificate shall also state the
representations and warranties of Borrower set forth in Section 4.1.30 are true
and correct as of the date of such certificate and that there are no trade
payables outstanding for more than sixty (60) days.
(d) Borrower will furnish, or cause to be furnished, to Lender
on or before thirty (30) days after the end March, June, September and December
throughout the term of the Loan, a occupancy report for the subject month,
including an average daily rate, accompanied by an Officer's Certificate stating
that such report is true, correct, accurate, and complete and fairly presents
the financial condition and results of the operations of Borrower and the
Property (subject to normal year-end adjustments) as applicable.
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(e) For the partial year period commencing on the date hereof,
and for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual
Budget not later than thirty (30) days prior to the commencement of such period
or Fiscal Year in form reasonably satisfactory to Lender. The Annual Budget
shall be subject to Lender's written approval (each such Annual Budget, an
"APPROVED ANNUAL BUDGET"). In the event that Lender objects to a proposed Annual
Budget submitted by Borrower, Lender shall advise Borrower of such objections
within fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise such Annual Budget and resubmit the same to Lender. Lender shall advise
Borrower of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise the same in accordance
with the process described in this subsection until Lender approves the Annual
Budget. Until such time that Lender approves a proposed Annual Budget, the most
recently Approved Annual Budget shall apply; provided that, such Approved Annual
Budget shall be adjusted to reflect actual increases in Taxes, Insurance
Premiums and Other Charges. Notwithstanding anything to the contrary contained
herein, Lender hereby approves Borrower's 2006 Annual Budget attached hereto as
Schedule 5.1.11(e).
(f) In the event that, Borrower must incur an extraordinary
operating expense or capital expense not set forth in the Approved Annual Budget
(each an "EXTRAORDINARY EXPENSE"), then Borrower shall promptly deliver to
Lender a reasonably detailed explanation of such proposed Extraordinary Expense
for Lender's approval, except in the case of emergency (provided that Borrower
will notify Lender promptly after such emergency).
(g) Reserved.
(h) Reserved.
(i) Rerserved.
(j) Reserved.
(k) Reserved.
(l) Any reports, statements or other information required to
be delivered under this Agreement shall be delivered (i) in paper form, (ii) on
a diskette, and (iii) if requested by Lender and within the capabilities of
Borrower's data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files). Borrower agrees that Lender may disclose information
regarding the Property and Borrower that is provided to Lender pursuant to this
Section 5.1.11(k) in connection with the Securitization to such parties
requesting such information in connection with such Securitization.
5.1.12 BUSINESS AND OPERATIONS. Borrower will continue to
engage in the businesses presently conducted by it as and to the extent the same
are necessary for the ownership, maintenance, management and operation of the
Property. Borrower will qualify to do business and will remain in good standing
under the laws of the jurisdiction of its formation as and to the extent the
same are required for the ownership, maintenance, management and operation of
the Property. Borrower shall at all times during the term of the Loan, continue
to own all of Equipment, Fixtures and Personal Property which are necessary to
operate the Property in the manner required hereunder and in the manner in which
it is currently operated.
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5.1.13 TITLE TO THE PROPERTY. Borrower will warrant and defend
(a) the title to the Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Lien of the Mortgage and the Assignment of Leases on the
Property, subject only to Liens permitted hereunder (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that the
Mortgage encumbering the Property is foreclosed in whole or in part or that the
Mortgage is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage encumbering the Property
prior to or subsequent to the Mortgage in which proceeding Lender is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or any of its constituent Persons or an
assignment by Borrower or any of its constituent Persons for the benefit of its
creditors, Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all costs of collection and defense, including attorneys' fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.
5.1.15 ESTOPPEL STATEMENT. (a) After request by Lender,
Borrower shall within ten (10) days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate
of the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi)
that the Note, this Agreement, the Mortgage and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification.
(b) Borrower shall deliver to Lender upon request, tenant
estoppel certificates from each commercial tenant leasing space at the Property
in form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than two (2)
times in any calendar year.
5.1.16 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 hereof.
5.1.17 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, or applicable to, 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, or applicable to, Borrower without the prior written consent of
Lender.
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5.1.18 CONFIRMATION OF REPRESENTATIONS. Borrower shall
deliver, in connection with any Securitization, (a) one (1) or more Officer's
Certificates certifying as to the accuracy of all representations made by
Borrower in the Loan Documents as of the date of the closing of such
Securitization in all relevant jurisdictions, and (b) certificates of the
relevant Governmental Authorities in all relevant jurisdictions indicating the
good standing and qualification of Borrower, Principal and Guarantor as of the
date of the Securitization.
5.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit
or initiate the joint assessment of the Property (a) with any other real
property constituting a tax lot separate from the Property, and (b) which
constitutes real property with any portion of the 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 real property portion of the Property.
5.1.20 LEASING MATTERS. Any Leases with respect to the
Property written after the date hereof, for more than 10,000 square feet shall
be approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed. Upon request, Borrower shall furnish Lender with
executed copies of all Leases. All renewals of Leases and all proposed Leases
shall provide for rental rates comparable to existing local market rates. All
proposed Leases shall be on commercially reasonable terms and shall not contain
any terms which would materially affect Lender's rights under the Loan
Documents. All Leases executed after the date hereof shall provide that they are
subordinate to the Mortgage and that the lessee agrees to attorn to Lender or
any purchaser at a sale by foreclosure or power of sale. Borrower (i) shall
observe and perform the obligations imposed upon the lessor under the Leases in
a commercially reasonable manner; (ii) shall enforce and may amend or terminate
the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner and in a manner not to impair the value of the Property involved except
that no termination by Borrower or acceptance of surrender by a tenant of any
Leases shall be permitted unless by reason of a tenant default and then only in
a commercially reasonable manner to preserve and protect the Property; provided,
however, that no such termination or surrender of any Lease covering more than
10,000 square feet will be permitted without the written consent of Lender;
(iii) shall not collect any of the rents more than one (1) month in advance
(other than security deposits); (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Rents (except as contemplated by the Loan
Documents); (v) shall not alter, modify or change the terms of the Leases in a
manner inconsistent with the provisions of the Loan Documents; and (vi) shall
execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time reasonably require. Notwithstanding anything to the contrary
contained herein, Borrower shall not enter into a lease of all or substantially
all of the Property without Lender's prior written consent. Further
notwithstanding anything to the contrary contained herein, Borrower shall
provide Lender at least fifteen (15) days prior notice for the approval or
rejection of any proposed Lease demising over 10,000 (each a "Material Lease").
In the event that Lender fails to respond within the required time period, such
failure shall be deemed to be the consent and approval of the Material Lease by
Lender if (I) Borrower has delivered to Lender all required documents and
information necessary to adequately and completely evaluate the Material Lease,
(II) Borrower has resubmitted the Material Lease with the notation "IMMEDIATE
RESPONSE REQUIRED, FAILURE TO RESPOND TO THIS LEASE APPROVAL REQUEST WITHIN
FIFTEEN (15) BUSINESS DAYS FROM RECEIPT SHALL BE DEEMED TO BE LENDER'S APPROVAL
OF THE LEASE" prominently displayed in bold, all caps and fourteen (14) point or
larger font at the top of each page of the Material Lease and the envelope
containing such Material Lease and (III) Lender does not approve or reject the
proposed Material Lease within fifteen (15) Business Days from the date Lender
receives the resubmitted request; provided, however, in no event shall Lender's
consent be deemed given without the written approval of Lender if the Lease is
for 10,000 square feet or greater.
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5.1.21 ALTERATIONS. Borrower shall obtain Lender's prior
written consent to any alterations to any Improvements, which consent shall not
be unreasonably withheld or delayed except with respect to alterations that may
have a material adverse effect on Borrower's financial condition, the value of
the Property or the Net Operating Income. Notwithstanding the foregoing,
Lender's consent shall not be required in connection with any alterations that
will not have a material adverse effect on Borrower's financial condition, the
value of the Property or the Net Operating Income, provided that such
alterations are made in connection with (a) tenant improvement work performed
pursuant to the terms of any Lease executed on or before the date hereof, (b)
tenant improvement work performed pursuant to the terms and provisions of a
Lease and not adversely affecting any structural component of any Improvements,
any utility or HVAC system contained in any Improvements or the exterior of any
building constituting a part of any Improvements, or (c) alterations performed
in connection with the Restoration of the Property after the occurrence of a
Casualty or Condemnation in accordance with the terms and provisions of this
Agreement. If the total unpaid amounts due and payable with respect to
alterations to the Improvements at the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) shall at any time exceed Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) (the "THRESHOLD
AMOUNT"), Borrower shall promptly deliver to Lender as security for the payment
of such amounts and as additional security for Borrower's obligations under the
Loan Documents any of the following: (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned to any Securities or any class thereof in connection
with any Securitization or (D) a completion and performance bond or an
irrevocable letter of credit (payable on sight draft only) issued by a financial
institution having a rating by S&P of not less than "A-1+" if the term of such
bond or letter of credit is no longer than three (3) months or, if such term is
in excess of three (3) months, issued by a financial institution having a rating
that is acceptable to Lender and that the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned to any Securities or class thereof in connection with any
Securitization. Such security shall be in an amount equal to the excess of the
total unpaid amounts with respect to alterations to the Improvements on the
Property (other than such amounts to be paid or reimbursed by tenants under the
Leases) over the Threshold Amount and Lender may apply such security from time
to time at the option of Lender to pay for such alterations.
5.1.22 OPERATION OF PROPERTY. (a) Borrower shall cause the
Property to be maintained in a good and safe condition and repair. (b) To the
extent a Management Agreement is in effect, Borrower shall cause the Property to
be operated, in all material respects, in accordance with the Management
Agreement (or Replacement Management Agreement) as applicable. In the event that
the Management Agreement expires or is terminated (without limiting any
obligation of Borrower to obtain Lender's consent to any termination or
modification of the Management Agreement in accordance with the terms and
provisions of this Agreement), Borrower shall promptly enter into a Replacement
Management Agreement with Manager or another Qualified Manager, as applicable.
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(c) Borrower shall: (i) promptly perform and/or observe, in
all material respects, all of the covenants and agreements required to be
performed and observed by it under the Management Agreement, if any, and do all
things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any material default under the
Management Agreement of which it is aware; (iii) promptly deliver to Lender a
copy of each financial statement, business plan, capital expenditures plan,
notice, report and estimate received by it under the Management Agreement; and
(iv) enforce the performance and observance of all of the covenants and
agreements required to be performed and/or observed by Manager under the
Management Agreement, in a commercially reasonable manner.
5.1.23 EMBARGOED PERSON. Borrower has performed and shall
perform reasonable due diligence to insure that at all times throughout the term
of the Loan, including after giving effect to any Transfers permitted pursuant
to the Loan Documents, (a) none of the funds or other assets of Borrower,
Principal and Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act
(including the anti-terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. ss.ss. 1701, et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder including those related to Specially Designated Nationals
and Specially Designated Global Terrorists, with the result that the investment
in Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by the Lender is in violation
of law ("EMBARGOED PERSON"); (b) no Embargoed Person has any interest of any
nature whatsoever in Borrower, Principal or Guarantor, as applicable, with the
result that the investment in Borrower, Principal or Guarantor, as applicable
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law; and (c) none of the funds of Borrower, Principal or Guarantor,
as applicable, have been derived from, or are the proceeds of, any unlawful
activity, including money laundering, terrorism or terrorism activities, with
the result that the investment in Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law, or may cause the Property to be subject to forfeiture or
seizure.
SECTION 5.2 NEGATIVE COVENANTS. From the date hereof until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Mortgage and any other
collateral in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:
5.2.1 OPERATION OF PROPERTY. (a) Borrower shall not, without
Lender's prior written consent (which consent shall not be unreasonably
withheld): (i) surrender, terminate, cancel, amend or modify the Management
Agreement; provided, that Borrower may, without Lender's consent, replace the
Manager so long as the replacement manager is a Qualified Manager pursuant to a
Replacement Management Agreement; (ii) reduce or consent to the reduction of the
term of the Management Agreement; (iii) increase or consent to the increase of
the amount of any charges under the Management Agreement; or (iv) otherwise
modify, change, supplement, alter or amend, or waive or release any of its
rights and remedies under, the Management Agreement in any material respect.
52
(b) Following the occurrence and during the continuance of an
Event of Default, Borrower shall not exercise any rights, make any decisions,
grant any approvals or otherwise take any action under the Management Agreement
without the prior written consent of Lender, which consent may be granted,
conditioned or withheld in Lender's sole discretion.
5.2.2 LIENS. Borrower shall not create, incur, assume or
suffer to exist any Lien on any portion of the Property or permit any such
action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan
Documents; and
(iii) Liens for Taxes or Other Charges not yet due.
5.2.3 DISSOLUTION. Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of the Property, (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
permitted by the Loan Documents, (d) modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction or (e) cause the Principal to (i) dissolve, wind up or liquidate or
take any action, or omit to take an action, as a result of which the Principal
would be dissolved, wound up or liquidated in whole or in part, or (ii) amend,
modify, waive or terminate the certificate of incorporation or bylaws of the
Principal, in each case, without obtaining the prior written consent of Lender
or Lender's designee.
5.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any
line of business other than the ownership and operation of the Property, or make
any material change in the scope or nature of its business objectives, purposes
or operations, or undertake or participate in activities other than the
continuance of its present business. Nothing contained in this Section 5.2.4 is
intended to expand the rights of Borrower contained in Section 5.2.10(d) hereof.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or
otherwise forgive or release any claim or debt (other than termination of Leases
in accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.2.6 ZONING. Borrower shall not initiate or consent to any
zoning reclassification of any portion of the Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.
53
5.2.7 INTENTIONALLY OMITTED.
5.2.8 INTENTIONALLY OMITTED.
5.2.9 ERISA. (a) Borrower shall not engage in any transaction
which 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 or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not and does not maintain an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within
the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any state
statute regulating investment of, or fiduciary obligations with respect to
governmental plans and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R.
ss.2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29 C.F.R.
ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29
C.F.R. ss.2510.3-101(c) or (e).
5.2.10 TRANSFERS. (a) Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its stockholders, general
partners, members, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower's ownership of the Property as a
means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations. Borrower acknowledges that
Lender has a valid interest in maintaining the value of the Property so as to
ensure that, should Borrower default in the repayment of the Debt or the
performance of the Other Obligations, Lender can recover the Debt by a sale of
the Property.
(b) Without the prior written consent of Lender, and except to
the extent otherwise set forth in this Section 5.2.10, Borrower shall not, and
shall not permit any Restricted Party do any of the following (collectively, a
"Transfer"): (i) sell, convey, mortgage, grant, bargain, encumber, pledge,
assign, grant options with respect to, or otherwise transfer or dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) the Property or
any part thereof or any legal or beneficial interest therein or (ii) permit a
Sale or Pledge of an interest in any Restricted Party, other than (A) pursuant
to Leases of space in the Improvements to tenants in accordance with the
provisions of Section 5.1.20 and (B) Permitted Transfers.
54
(c) A Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation,
any merger, consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock; (iv) if a Restricted Party is a limited or
general partnership or joint venture, any merger or consolidation or the change,
removal, resignation or addition of a general partner or the Sale or Pledge of
the partnership interest of any general partner or any profits or proceeds
relating to such partnership interest, or the Sale or Pledge of limited
partnership interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non-member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests or the
creation or issuance of new non-managing membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of the managing agent (including, without limitation, an
Affiliated Manager) other than in accordance with Section 5.1.22 hereof.
(d) Notwithstanding the provisions of this Section 5.2.10,
Lender's consent shall not be required in connection with one or a series of
Transfers, of not more than forty-nine percent (49%) of the stock, the limited
partnership interests or non-managing membership interests (as the case may be)
in a Restricted Party; provided, however, no such Transfer shall result in the
change of Control in a Restricted Party, and as a condition to each such
Transfer, Lender shall receive not less than thirty (30) days prior notice of
such proposed Transfer. If after giving effect to any such Transfer, more than
forty-nine percent (49%) in the aggregate of direct or indirect interests in a
Restricted Party are owned by any Person and its Affiliates that owned less than
forty-nine percent (49%) direct or indirect interest in such Restricted Party as
of the Closing Date, Borrower shall, no less than thirty (30) days prior to the
effective date of any such Transfer, deliver to Lender an Additional Insolvency
Opinion acceptable to Lender and the Rating Agencies. In addition, at all times,
Acadia Realty Trust must continue to Control Borrower, Guarantor and Manager, if
any, and own, directly or indirectly, at least a 51% legal and beneficial
interest in Borrower, Guarantor and Manager. Notwithstanding anything to the
contrary contained herein, provided the conditions set forth in this subsection
(d) are satisfied, Lender's consent shall not be required in connection the
Transfer publicly traded shares in Acadia Realty Trust.
(e) No consent to any assumption of the Loan shall occur on or
before the first (1st) anniversary of the first (1st) Payment Date. Thereafter,
Lender's consent to a one (1) time Transfer of the Property and assumption of
the Loan shall not be unreasonably withheld provided that Lender receives sixty
(60) days prior written notice of such Transfer and no Event of Default has
occurred and is continuing, and further provided that the following additional
requirements are satisfied:
55
(i) Borrower shall pay Lender a transfer fee equal to
one percent (1%) of the outstanding principal balance of the
Loan at the time of such transfer;
(ii) Borrower shall pay any and all reasonable
out-of-pocket costs incurred in connection with such Transfer
(including, without limitation, Lender's counsel fees and
disbursements and all recording fees, title insurance premiums
and mortgage and intangible taxes and the fees and expenses of
the Rating Agencies pursuant to clause (x) below);
(iii) The proposed transferee (the "Transferee") or
Transferee's Principals must have demonstrated expertise in
owning and operating properties similar in location, size,
class and operation to the Property, which expertise shall be
reasonably determined by Lender;
(iv) Transferee and Transferee's Principals shall, as of
the date of such transfer, have an aggregate net worth and
liquidity reasonably acceptable to Lender;
(v) Transferee, Transferee's Principals and all other
entities which may be owned or Controlled directly or
indirectly by Transferee's Principals ("Related Entities")
must not have been party to any bankruptcy proceedings,
voluntary or involuntary, made an assignment for the benefit
of creditors or taken advantage of any insolvency act, or any
act for the benefit of debtors within seven (7) years prior to
the date of the proposed Transfer;
(vi) Transferee shall assume all of the obligations of
Borrower under the Loan Documents in a manner satisfactory to
Lender in all respects, including, without limitation, by
entering into an assumption agreement in form and substance
satisfactory to Lender;
(vii) There shall be no material litigation or
regulatory action pending or threatened against Transferee,
Transferee's Principals or Related Entities which is not
reasonably acceptable to Lender;
(viii) Transferee, Transferee's Principals and Related
Entities shall not have defaulted under its or their
obligations with respect to any other Indebtedness in a manner
which is not reasonably acceptable to Lender;
(ix) Transferee and Transferee's Principals must be able
to satisfy all the representations and covenants set forth in
Sections 4.1.30, 4.1.35, 5.1.23 and 5.2.9 of this Agreement,
no Default or Event of Default shall otherwise occur as a
result of such Transfer, and Transferee and Transferee's
Principals shall deliver (A) all organizational documentation
reasonably requested by Lender, which shall be reasonably
satisfactory to Lender and (B) all certificates, agreements
and covenants reasonably required by Lender;
56
(x) Transferee shall be approved by the Rating Agencies
selected by Lender, which approval, if required by Lender,
shall take the form of a confirmation in writing from such
Rating Agencies to the effect that such Transfer will not
result in a requalification, reduction, downgrade or
withdrawal of the ratings in effect immediately prior to such
assumption or transfer for the Securities or any class thereof
issued in connection with a Securitization which are then
outstanding;
(xi) Borrower or Transferee, at its sole cost and
expense, shall deliver to Lender an Additional Insolvency
Opinion reflecting such Transfer satisfactory in form and
substance to Lender;
(xii) Prior to any release of Guarantor, one (1) or more
substitute guarantors reasonably acceptable to Lender shall
have assumed all of the liabilities and obligations of
Guarantor under the Guaranty and Environmental Indemnity
executed by Guarantor or execute a replacement guaranty and
environmental indemnity reasonably satisfactory to Lender;
(xiii) Borrower shall deliver, at its sole cost and
expense, an endorsement to the Title Insurance Policy, as
modified by the assumption agreement, as a valid first lien on
the Property and naming the Transferee as owner of the
Property, which endorsement shall insure that, as of the date
of the recording of the assumption agreement, the Property
shall not be subject to any additional exceptions or liens
other than those contained in the Title Policy issued on the
date hereof and the Permitted Encumbrances; and
(xiv) The Property shall be managed by a Qualified
Manager pursuant to a Replacement Management Agreement.
Immediately upon a Transfer to such Transferee and the
satisfaction of all of the above requirements, the named Borrower and Guarantor
herein shall be released from all liability under this Agreement, the Note, the
Mortgage and the other Loan Documents accruing after such Transfer. The
foregoing release shall be effective upon the date of such Transfer, but Lender
agrees to provide written evidence thereof reasonably requested by Borrower.
(f) Lender shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Debt immediately due and payable upon Borrower's Transfer without
Lender's consent. This provision shall apply to every Transfer regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
Transfer.
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VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION 6.1 INSURANCE. (a) Borrower shall obtain and maintain,
or cause to be maintained, insurance for Borrower and the Property providing at
least the following coverages:
(i) comprehensive all risk insurance ("Special Form")
including, but not limited to, loss caused by any type of
windstorm or hail on the Improvements and the Personal
Property, (A) in an amount equal to one hundred percent (100%)
of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation, but the amount shall
in no event be less than the outstanding principal balance of
the Loan; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all
co-insurance provisions or to be written on a no co-insurance
form; (C) providing for no deductible in excess of Ten
Thousand and 00/100 Dollars ($10,000.00) for all such
insurance coverage excluding windstorm and earthquake and (D)
if any of the Improvements or the use of the Property shall at
any time constitute legal non-conforming structures or uses,
coverage for loss due to operation of law in an amount equal
to the full Replacement Cost, coverage for demolition costs
and coverage for increased costs of construction. In addition,
Borrower shall obtain: (x) if any portion of the Improvements
is currently or at any time in the future located in a
federally designated "special flood hazard area", flood hazard
insurance in an amount equal to the lesser of (1) the
outstanding principal balance of the Note or (2) the maximum
amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as Lender shall
require and (y) earthquake insurance in amounts and in form
and substance satisfactory to Lender in the event the Property
is located in an area with a high degree of seismic activity;
(ii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; (C) in an
amount equal to one hundred percent (100%) of the projected
gross revenues from the operation of the Property (as reduced
to reflect expenses not incurred during a period of
Restoration) for a period of at least twenty-four (24) months
after the date of the Casualty; and (D) containing an extended
period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has
been repaired, the continued loss of income will be insured
until such income either returns to the same level it was at
prior to the loss, or the expiration of six (6) months from
the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of
such period. The amount of such business income insurance
shall be determined prior to the date hereof and at least once
each year thereafter based on Borrower's reasonable estimate
of the gross revenues from the Property for the succeeding
twenty-four (24) month period. Notwithstanding the provisions
of Section 2.7.1 hereof, all proceeds payable to Lender
pursuant to this subsection shall be held by Lender and shall
be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the
Note; provided, however, that nothing herein contained shall
be deemed to relieve Borrower of its obligations to pay the
obligations secured by the Loan Documents on the respective
dates of payment provided for in this Agreement and the other
Loan Documents except to the extent such amounts are actually
paid out of the proceeds of such business income insurance;
58
(iii) at all times during which structural construction,
repairs or alterations are being made with respect to the
Improvements, and only if the Property coverage form does not
otherwise apply, (A) owner's contingent or protective
liability insurance, otherwise known as Owner Contractor's
Protective Liability, covering claims not covered by or under
the terms or provisions of the above mentioned commercial
general liability insurance policy and (B) the insurance
provided for in subsection (i) above written in a so-called
builder's risk completed value form (1) on a non-reporting
basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the
Property and (4) with an agreed amount endorsement waiving
co-insurance provisions;
(iv) comprehensive boiler and machinery insurance, if
steam boilers or other pressure-fixed vessels are in
operation, in amounts as shall be reasonably required by
Lender on terms consistent with the commercial property
insurance policy required under subsection (i) above;
(v) commercial general liability insurance against
claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such
insurance (A) to be on the so-called "occurrence" form with a
combined limit of not less than Two Million and 00/100 Dollars
($2,000,000.00) in the aggregate and One Million and 00/100
Dollars ($1,000,000.00) per occurrence; (B) to continue at not
less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions
making such protection inadequate and (C) to cover at least
the following hazards: (1) premises and operations; (2)
products and completed operations on an "if any" basis; (3)
independent contractors; (4) blanket contractual liability for
all written contracts and (5) contractual liability covering
the indemnities contained in Article 9 of the Mortgage to the
extent the same is available;
(vi) automobile liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles
containing minimum limits per occurrence of One Million
Dollars and 00/100 Dollars ($1,000,000.00);
(vii) worker's compensation and employee's liability
subject to the worker's compensation laws of the applicable
state;
(viii) umbrella and excess liability insurance in an
amount not less than Fifty Million and 00/100 Dollars
($50,000,000.00) per occurrence on terms consistent with the
commercial general liability insurance policy required under
subsection (v) above, including, but not limited to,
supplemental coverage for employer liability and automobile
liability, which umbrella liability coverage shall apply in
excess of the automobile liability coverage in clause (vi)
above;
59
(ix) the insurance required under this Section 6.1(a)
above shall cover perils of terrorism and acts of terrorism
and Borrower shall maintain insurance for loss resulting from
perils and acts of terrorism on terms (including amounts)
consistent with those required under Sections 6.1(a) above at
all times during the term of the Loan; and
(x) upon sixty (60) days written notice, such other
reasonable insurance, including, but not limited to, sinkhole
or land subsidence insurance, and in such reasonable amounts
as Lender from time to time may reasonably request against
such other insurable hazards which at the time are commonly
insured against for property similar to the Property located
in or around the region in which the Property is located.
(b) All insurance provided for in Section 6.1(a) hereof, shall
be obtained under valid and enforceable policies (collectively, the "Policies"
or in the singular, the "Policy"), and shall be subject to the approval of
Lender as to insurance companies, amounts, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having a claims
paying ability rating of "AA" or better (and the equivalent thereof) by at least
two (2) of the Rating Agencies rating the Securities (one (1) of which shall be
S&P if they are rating the Securities and one (1) of which will be Moody's if
they are rating the Securities), or if only one (1) Rating Agency is rating the
Securities, then only by such Rating Agency. The Policies described in Section
6.1 hereof (other than those strictly limited to liability protection) shall
designate Lender as loss payee. Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, certificates
of insurance evidencing the Policies accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the "Insurance Premiums"),
shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate
to the Property the amount of coverage from time to time required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of Section 6.1(a) hereof.
(d) All Policies provided for or contemplated by Section
6.1(a) hereof, except for the Policy referenced in Section 6.1(a)(vii) of this
Agreement, shall name Borrower as the insured and Lender as the additional
insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies shall contain clauses or endorsements to the
effect that:
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(i) no act or negligence of Borrower, or anyone acting
for Borrower, or of any tenant or other occupant, or failure
to comply with the provisions of any Policy, which might
otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially changed (other
than to increase the coverage provided thereby) or canceled
without at least thirty (30) days written notice to Lender and
any other party named therein as an additional insured;
(iii) the issuers thereof shall give written notice to
Lender if the Policy has not been renewed thirty (30) days
prior to its expiration; and
(iv) Lender shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right, without notice to Borrower, to take such action as
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its
sole discretion deems appropriate after three (3) Business Days notice to
Borrower if prior to the date upon which any such coverage will lapse or at any
time Lender deems necessary (regardless of prior notice to Borrower) to avoid
the lapse of any such coverage. All premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrower to Lender upon demand and, until paid, shall be secured by
the Mortgage and shall bear interest at the Default Rate.
SECTION 6.2 CASUALTY. If the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a "Casualty"),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the completion of the Restoration of the
Property pursuant to Section 6.4 hereof as nearly as possible to the condition
the Property was in immediately prior to such Casualty, with such alterations as
may be reasonably approved by Lender and otherwise in accordance with Section
6.4 hereof. Borrower shall pay all costs of such Restoration whether or not such
costs are covered by insurance. Lender may, but shall not be obligated to make
proof of loss if not made promptly by Borrower. In addition, Lender may
participate in any settlement discussions with any insurance companies (and
shall approve the final settlement, which approval shall not be unreasonably
withheld or delayed) with respect to any Casualty in which the Net Proceeds or
the costs of completing the Restoration are equal to or greater than One Million
and 00/100 Dollars ($1,000,000.00) and Borrower shall deliver to Lender all
instruments required by Lender to permit such participation.
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SECTION 6.3 CONDEMNATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any proceeding for the
Condemnation of the Property and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any portion of the Property is taken by a condemning authority, Borrower
shall promptly commence and diligently prosecute the Restoration of the Property
pursuant to Section 6.4 hereof and otherwise comply with the provisions of
Section 6.4 hereof. If the Property is sold, through foreclosure or otherwise,
prior to the receipt by Lender of the Award, Lender shall have the right,
whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.
SECTION 6.4 RESTORATION. The following provisions shall apply
in connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than One Million and
00/100 Dollars ($1,000,000.00) and the costs of completing the Restoration shall
be less than One Million and 00/100 Dollars ($1,000,000.00), the Net Proceeds
will be disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 6.4(b)(i) hereof are met and Borrower delivers
to Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of this
Agreement.
(b) If the Net Proceeds are equal to or greater than One
Million and 00/100 Dollars ($1,000,000.00) or the costs of completing the
Restoration is equal to or greater than One Million and 00/100 Dollars
($1,000,000.00) Lender shall make the Net Proceeds available for the Restoration
in accordance with the provisions of this Section 6.4. The term "Net Proceeds"
for purposes of this Section 6.4 shall mean: (i) the net amount of all insurance
proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv), (ix) and (x)
as a result of such damage or destruction, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting same ("Insurance Proceeds"), or (ii) the net amount of the
Award, after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same ("Condemnation
Proceeds"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower
for Restoration provided that each of the following conditions
are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, less than twenty-five percent (25%) of the
total floor area of the Improvements on the Property has
been damaged, destroyed or rendered unusable as a result
of such Casualty or (2) in the event the Net Proceeds
are Condemnation Proceeds, less than ten percent (10%)
of the land constituting the Property is taken, and such
land is located along the perimeter or periphery of the
Property, and no portion of the Improvements is located
on such land;
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(C) Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space
Percentage of the total rentable space in the Property
which has been demised under executed and delivered
Leases in effect as of the date of the occurrence of
such Casualty or Condemnation, whichever the case may
be, shall remain in full force and effect during and
after the completion of the Restoration, notwithstanding
the occurrence of any such Casualty or Condemnation,
whichever the case may be, and Borrower and/or Tenant,
as applicable under the respective Lease, will make all
necessary repairs and restorations thereto at their sole
cost and expense. The term "Rentable Space Percentage"
shall mean (1) in the event the Net Proceeds are
Insurance Proceeds, a percentage amount equal to ninety
percent (90%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to
ninety percent (90%);
(D) Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than
sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently
pursue the same to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal
and interest under the Note, which will be incurred with
respect to the Property as a result of the occurrence of
any such Casualty or Condemnation, whichever the case
may be, will be covered out of (1) the Net Proceeds, (2)
the insurance coverage referred to in Section 6.1(a)(ii)
hereof, if applicable, or (3) by other funds of
Borrower;
(F) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of
(1) six (6) months prior to the Maturity Date, (2) the
earliest date required for such completion under the
terms of any Leases, (3) such time as may be required
under all applicable Legal Requirements in order to
repair and restore the Property to the condition it was
in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to
such Condemnation, as applicable, or (4) the expiration
of the insurance coverage referred to in Section
6.1(a)(ii) hereof;
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(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted
under all applicable Legal Requirements;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable Legal Requirements;
(I) such Casualty or Condemnation, as applicable,
does not result in the loss of access to the Property or
the Improvements;
(J) the Debt Service Coverage Ratio for the Property,
after giving effect to the Restoration, shall be equal
to or greater than 1.05 to 1.0;
(K) Borrower shall deliver, or cause to be delivered,
to Lender a signed detailed budget approved in writing
by Borrower's architect or engineer stating the entire
cost of completing the Restoration, which budget shall
be acceptable to Lender; and
(L) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are
sufficient in Lender's discretion to cover the cost of
the Restoration.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance
with the provisions of this Section 6.4(b), shall constitute
additional security for the Debt and Other Obligations under
the Loan Documents. The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence
satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full,
and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to
file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record
or in the alternative fully insured to the satisfaction of
Lender by the title company issuing the Title Insurance
Policy.
(iii) All plans and specifications required in
connection with the Restoration shall be subject to prior
review and acceptance in all respects by Lender and by an
independent consulting engineer selected by Lender (the
"Casualty Consultant"). Lender shall have the use of the plans
and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under
which they have been engaged, shall be subject to prior review
and acceptance by Lender and the Casualty Consultant. All
costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration
including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant's fees, shall be
paid by Borrower.
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(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal
to the costs actually incurred from time to time for work in
place as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. The term "Casualty
Retainage" shall mean an amount equal to ten percent (10%) of
the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until
the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 6.4(b), be less than
the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section
6.4(b) and that all approvals necessary for the re-occupancy
and use of the Property have been obtained from all
appropriate governmental and quasi-governmental authorities,
and Lender receives evidence satisfactory to Lender that the
costs of the Restoration have been paid in full or will be
paid in full out of the Casualty Retainage; provided, however,
that Lender will release the portion of the Casualty Retainage
being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon
which the Casualty Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in
accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor,
subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance
Policy, and Lender receives an endorsement to the Title
Insurance Policy insuring the continued priority of the lien
of the Mortgage and evidence of payment of any premium payable
for such endorsement. If required by Lender, the release of
any such portion of the Casualty Retainage shall be approved
by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make disbursements
of the Net Proceeds more frequently than once every calendar
month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the opinion of Lender in
consultation with the Casualty Consultant, be sufficient to
pay in full the balance of the costs which are estimated by
the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the
deficiency (the "Net Proceeds Deficiency") with Lender before
any further disbursement of the Net Proceeds shall be made.
The Net Proceeds Deficiency deposited with Lender shall be
held by Lender and shall be disbursed for costs actually
incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds,
and until so disbursed pursuant to this Section 6.4(b) shall
constitute additional security for the Debt and Other
Obligations under the Loan Documents.
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(vii) The excess, if any, of the Net Proceeds (and the
remaining balance, if any, of the Net Proceeds Deficiency)
deposited with Lender after the Casualty Consultant certifies
to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b), and the
receipt by Lender of evidence satisfactory to Lender that all
costs incurred in connection with the Restoration have been
paid in full, shall be deposited in the Cash Management
Account to be disbursed in accordance with the Cash Management
Agreement, provided no Event of Default shall have occurred
and shall be continuing under the Note, this Agreement or any
of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Section 6.4(b)(vii) hereof may be retained and applied by Lender
toward the payment of the Debt in accordance with Section 2.4.2 hereof, whether
or not then due and payable in such order, priority and proportions as Lender in
its sole discretion shall deem proper, or, at the discretion of Lender, the same
may be paid, either in whole or in part, to Borrower for such purposes as Lender
shall approve, in its discretion.
(d) In the event of foreclosure of the Mortgage, or other
transfer of title to the Property in extinguishment in whole or in part of the
Debt all right, title and interest of Borrower in and to the Policies that are
not blanket Policies then in force concerning the Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Lender or other transferee in the event of such other transfer of title.
VII. RESERVE FUNDS
SECTION 7.1 REQUIRED REPAIRS.
7.1.1 DEPOSITS. Borrower shall perform the repairs at the
Property, as more particularly set forth on Schedule II hereto (such repairs
hereinafter referred to as "Required Repairs"). Borrower shall complete the
Required Repairs on or before the required deadline for each repair as set forth
on Schedule II. It shall be an Event of Default under this Agreement if (a)
Borrower does not complete the Required Repairs at the Property by the required
deadline for each repair as set forth on Schedule II, or (b) Borrower does not
satisfy each condition contained in Section 7.1.2 hereof. Upon the occurrence of
such an Event of Default, Lender, at its option, may withdraw all Required
Repair Funds from the Required Repair Account and Lender may apply such funds
either to completion of the Required Repairs at the Property or toward payment
of the Debt in such order, proportion and priority as Lender may determine in
its sole discretion. Lender's right to withdraw and apply Required Repair Funds
shall be in addition to all other rights and remedies provided to Lender under
this Agreement and the other Loan Documents. On the Closing Date, Borrower shall
deposit with Lender the amount for the Property set forth on such Schedule II
hereto to perform the Required Repairs for the Property. Amounts so deposited
with Lender shall be held by Lender in accordance with Section 7.5 hereof.
Amounts so deposited shall hereinafter be referred to as Borrower's "Required
Repair Fund" and the account in which such amounts are held shall hereinafter be
referred to as Borrower's "Required Repair Account".
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7.1.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse
to Borrower the Required Repair Funds from the Required Repair Account from time
to time upon satisfaction by Borrower of each of the following conditions: (a)
Borrower shall submit a written request for payment to Lender at least thirty
(30) days prior to the date on which Borrower requests such payment be made and
specifies the Required Repairs to be paid, (b) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (c) Lender shall have received
an Officers' Certificate (i) stating that all Required Repairs to be funded by
the requested disbursement have been completed in good and workmanlike manner
and in accordance with all applicable federal, state and local laws, rules and
regulations, such certificate to be accompanied by a copy of any license, permit
or other approval by any Governmental Authority required to commence and/or
complete the Required Repairs, (ii) identifying each Person that supplied
materials or labor in connection with the Required Repairs to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in
full or will be paid in full upon such disbursement, such Officers' Certificate
to be accompanied by lien waivers or other evidence of payment satisfactory to
Lender, (d) at Lender's option, a title search for the Property indicating that
the Property is free from all liens, claims and other encumbrances not
previously approved by Lender, and (e) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs to be
funded by the requested disbursement have been completed and are paid for or
will be paid upon such disbursement to Borrower. Lender shall not be required to
make disbursements from the Required Repair Account with respect to the Property
unless such requested disbursement is in an amount greater than Twenty-five
Thousand and 00/100 Dollars ($25,000.00) (or a lesser amount if the total amount
in the Required Repair Account is less than Twenty-five Thousand and 00/100
Dollars ($25,000.00), in which case only one disbursement of the amount
remaining in the account shall be made) and such disbursement shall be made only
upon satisfaction of each condition contained in this Section 7.1.2.
SECTION 7.2 TAX AND INSURANCE ESCROW FUND. Borrower shall pay
to Lender on each Payment Date (a) one-twelfth (1/12)of the Taxes and Other
Charges that Lender estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Lender sufficient funds to pay all such
Taxes and Other Charges at least thirty (30) days prior to their respective due
dates, and (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 (said amounts in (a) and (b) above
hereinafter called the "Tax and Insurance Escrow Fund"). The Tax and Insurance
Escrow Fund and the Monthly Debt Service Payment Amount, shall be added together
and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply
the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to Section 5.1.2 hereof and under the
Mortgage. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums), without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts due for Taxes, Other Charges and
Insurance Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. Any amount remaining
in the Tax and Insurance Escrow Fund after the Debt has been paid in full shall
be returned to Borrower. If at any time Lender reasonably determines that the
Tax and Insurance Escrow Fund is not or will not be sufficient to pay Taxes,
Other Charges and Insurance Premiums by the dates set forth in (a) and (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 the due
date of the Taxes and Other Charges and/or thirty (30) days prior to expiration
of the Policies, as the case may be. Notwithstanding anything contained in this
Section 7.2 to the contrary, Borrower shall not be required to make monthly
escrow payments to Tax and Insurance Escrow Fund for Insurance Premiums so long
as (i) no Event of Default exists hereunder (or under any of the other Loan
Documents), (ii) Borrower maintains a blanket insurance policy including the
Property and (iii) Borrower provides evidence reasonably acceptable to Lender
that such Insurance Premiums due under said blanket policy have been paid on or
before the due date therefore.
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SECTION 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
7.3.1 REPLACEMENT RESERVE FUND. Borrower shall pay to Lender
on each Payment Date one-twelfth (1/12) of $22,576.00 [$0.15 psf] (the
"Replacement Reserve Monthly Deposit") reasonably estimated by Lender in its
sole discretion to be due for replacements and repairs required to be made to
the Property during the calendar year (collectively, the "Replacements").
Amounts so deposited shall hereinafter be referred to as Borrower's "Replacement
Reserve Fund" and the account in which such amounts are held shall hereinafter
be referred to as Borrower's "Replacement Reserve Account". Lender may reassess
its estimate of the amount necessary for the Replacement Reserve Fund from time
to time, and may increase the monthly amounts required to be deposited into the
Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender
determines in its reasonable discretion that an increase is necessary to
maintain the proper maintenance and operation of the Property.
7.3.2 DISBURSEMENTS FROM REPLACEMENT RESERVE ACCOUNT. (a)
Lender shall make disbursements from the Replacement Reserve Account to pay
Borrower only for the costs of the Replacements. Lender shall not be obligated
to make disbursements from the Replacement Reserve Account to reimburse Borrower
for the costs of routine maintenance to the Property, replacements of inventory
or for costs which are to be reimbursed from the Required Repair Fund or
Rollover Reserve Fund.
(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 7.3.2, disburse to
Borrower amounts from the Replacement Reserve Account necessary to pay for the
actual approved costs of Replacements or to reimburse Borrower therefor, upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to Section 7.3.2(e) hereof) as determined by Lender.
In no event shall Lender be obligated to disburse funds from the Replacement
Reserve Account if a Default or an Event of Default exists.
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(c) Each request for disbursement from the Replacement Reserve
Account shall be in a form specified or approved by Lender and shall specify (i)
the specific Replacements for which the disbursement is requested, (ii) the
quantity and price of each item purchased, if the Replacement includes the
purchase or replacement of specific items, (iii) the price of all materials
(grouped by type or category) used in any Replacement other than the purchase or
replacement of specific items, and (iv) the cost of all contracted labor or
other services applicable to each Replacement for which such request for
disbursement is made. With each request Borrower shall certify that all
Replacements have been made in accordance with all applicable Legal Requirements
of any Governmental Authority having jurisdiction over the Property. Each
request for disbursement shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided and, unless
Lender has agreed to issue joint checks as described below in connection with a
particular Replacement, each request shall include evidence satisfactory to
Lender of payment of all such amounts. Except as provided in Section 7.3.2(e)
hereof, each request for disbursement from the Replacement Reserve Account shall
be made only after completion of the Replacement for which disbursement is
requested. Borrower shall provide Lender evidence of completion of the subject
Replacement satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to which a disbursement is requested prior to
submitting such request for disbursement from the Replacement Reserve Account
or, at the request of Borrower, Lender will issue joint checks, payable to
Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case
of payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than Twenty-five Thousand and 00/100 Dollars ($25,000.00) for
completion of its work or delivery of its materials. Any lien waiver delivered
hereunder shall conform to the requirements of applicable law and shall cover
all work performed and materials supplied (including equipment and fixtures) for
the Property by that contractor, supplier, subcontractor, mechanic or
materialman through the date covered by the current reimbursement request (or,
in the event that payment to such contractor, supplier, subcontractor, mechanic
or materialmen is to be made by a joint check, the release of lien shall be
effective through the date covered by the previous release of funds request).
(e) If (i) the cost of a Replacement exceeds Twenty-five
Thousand and 00/100 Dollars ($25,000.00), (ii) the contractor performing such
Replacement requires periodic payments pursuant to terms of a written contract,
and (iii) Lender has approved in writing in advance such periodic payments, a
request for reimbursement from the Replacement Reserve Account may be made after
completion of a portion of the work under such contract, provided (A) such
contract requires payment upon completion of such portion of the work, (B) the
materials for which the request is made are on site at the Property and are
properly secured or have been installed in the Property, (C) all other
conditions in this Agreement for disbursement have been satisfied, (D) funds
remaining in the Replacement Reserve Account are, in Lender's judgment,
sufficient to complete such Replacement and other Replacements when required,
and (E) if required by Lender, each contractor or subcontractor receiving
payments under such contract shall provide a waiver of lien with respect to
amounts which have been paid to that contractor or subcontractor.
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(f) Borrower shall not make a request for disbursement from
the Replacement Reserve Account more frequently than once in any calendar month
and (except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than Twenty-five Thousand and
00/100 Dollars ($25,000.00).
7.3.3 PERFORMANCE OF REPLACEMENTS. (a) Borrower shall make
Replacements when required in order to keep the Property in condition and repair
consistent with other first class, full service shopping centers in the same
market segment in the metropolitan area in which the Property is located, and to
keep the Property or any portion thereof from deteriorating. Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
practicable following the commencement of making each such Replacement.
(b) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials in connection with the
Replacements. Upon Lender's request, Borrower shall assign any contract or
subcontract to Lender.
(c) In the event Lender determines in its reasonable
discretion that any Replacement is not being performed in a workmanlike or
timely manner or that any Replacement has not been completed in a workmanlike or
timely manner, Lender shall have the option to withhold disbursement for such
unsatisfactory Replacement and to proceed under existing contracts or to
contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, without providing any prior notice to Borrower and to exercise
any and all other remedies available to Lender upon an Event of Default
hereunder.
(d) In order to facilitate Lender's completion or making of
such Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto the Property and perform any and all work and labor
necessary to complete or make such Replacements and/or employ watchmen to
protect the Property from damage. All sums so expended by Lender, to the extent
not from the Replacement Reserve Fund, shall be deemed to have been advanced
under the Loan to Borrower and secured by the Mortgage. For this purpose
Borrower constitutes and appoints Lender its true and lawful attorney-in-fact
with full power of substitution to complete or undertake such Replacements in
the name of Borrower. Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. Borrower empowers said
attorney-in-fact as follows: (i) to use any funds in the Replacement Reserve
Account for the purpose of making or completing such Replacements; (ii) to make
such additions, changes and corrections to such Replacements as shall be
necessary or desirable to complete such Replacements; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing bills
and claims which are or may become Liens against the Property, or as may be
necessary or desirable for the completion of such Replacements, or for clearance
of title; (v) to execute all applications and certificates in the name of
Borrower which may be required by any of the contract documents; (vi) to
prosecute and defend all actions or proceedings in connection with the Property
or the rehabilitation and repair of the Property; and (vii) to do any and every
act which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
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(e) Nothing in this Section 7.3.3 shall: (i) make Lender
responsible for making or completing any Replacements; (ii) require Lender to
expend funds in addition to the Replacement Reserve Fund to make or complete any
Replacement; (iii) obligate Lender to proceed with any Replacements; or (iv)
obligate Lender to demand from Borrower additional sums to make or complete any
Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this Section 7.3.3
to enter onto the Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any Replacements made pursuant to this Section 7.3.3. 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 7.3.3(f) or the completion of
Replacements pursuant to this Section 7.3.3.
(g) Lender may require an inspection of the Property at
Borrower's expense prior to making a monthly disbursement from the Replacement
Reserve Account in order to verify completion of the Replacements for which
reimbursement is sought. Lender 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 from
the Replacement Reserve Account. Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by Lender
or by an independent qualified professional.
(h) The Replacements and all materials, equipment, fixtures,
or any other item comprising a part of any Replacement shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialmen's or other liens (except for those Liens existing on the date of
this Agreement which have been approved in writing by Lender).
(i) Before each disbursement from the Replacement Reserve
Account, Lender may require Borrower to provide Lender with a search of title to
the Property effective to the date of the disbursement, which search shows that
no mechanic's or materialmen's liens or other liens of any nature have been
placed against the Property since the date of recordation of the related
Mortgage and that title to the Property is free and clear of all Liens (other
than the lien of the related Mortgage and any other Liens previously approved in
writing by Lender, if any).
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(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen's compensation
insurance, builder's risk, and public liability insurance and other insurance to
the extent required under applicable law in connection with a particular
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender. All such policies which can be endorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so
endorsed. Certified copies of such policies shall be delivered to Lender.
7.3.4 FAILURE TO MAKE REPLACEMENTS. (a) It shall be an Event
of Default under this Agreement if Borrower fails to comply with any provision
of this Section 7.3 and such failure is not cured within thirty (30) days after
notice from Lender. Upon the occurrence of such an Event of Default, Lender may
use the Replacement Reserve Fund (or any portion thereof) for any purpose,
including but not limited to completion of the Replacements as provided in
Section 7.3.3, or for any other repair or replacement to the Property or toward
payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply the
Replacement Reserve Fund shall be in addition to all other rights and remedies
provided to Lender under this Agreement and the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply
all or any portion of the Replacement Reserve Fund on account of an Event of
Default to payment of the Debt or in any specific order or priority.
7.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The
insufficiency of any balance in the Replacement Reserve Account shall not
relieve Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.
SECTION 7.4 ROLLOVER RESERVE.
7.4.1 DEPOSITS TO ROLLOVER RESERVE FUND. Borrower shall pay to
Lender on each Payment Date the sum of $3,583.33, which amounts shall be
deposited with and held by Lender for tenant improvement and leasing commission
obligations incurred following the date hereof. Amounts so deposited shall
hereinafter be referred to as the "Rollover Reserve Fund" and the account to
which such amounts are held shall hereinafter be referred to as the "Rollover
Reserve Account".
7.4.2 WITHDRAWAL OF ROLLOVER RESERVE FUNDS. Lender shall make
disbursements from the Rollover Escrow Fund for tenant improvement and leasing
commission obligations incurred by Borrower. All such expenses shall be approved
by Lender in its sole discretion. Lender shall make disbursements as requested
by Borrower on a quarterly basis in increments of no less than $5,000.00 upon
delivery by Borrower of Lender's standard form of draw request accompanied by
copies of paid invoices for the amounts requested and, if required by Lender,
lien waivers and releases from all parties furnishing materials and/or services
in connection with the requested payment. Lender may require an inspection of
the Property at Borrower's expense prior to making a quarterly disbursement in
order to verify completion of improvements for which reimbursement is sought.
All earnings or interest on the Rollover Escrow Fund shall be and become part of
such Rollover Escrow Fund and shall be disbursed as provided in this Section
7.4.
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SECTION 7.5 RESERVE FUNDS, GENERALLY. Borrower grants to
Lender a first-priority perfected security interest in each of the Reserve Funds
and any and all monies now or hereafter deposited in each Reserve Fund as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Funds shall constitute additional security for
the Debt. Upon the occurrence of an Event of Default, Lender may, in addition to
any and all other rights and remedies available to Lender, apply any sums then
present in any or all of the Reserve Funds to the payment of the Debt in any
order in its sole discretion. The Reserve Funds shall not constitute trust funds
and may be commingled with other monies held by Lender. The Reserve Funds shall
be held in an Eligible Account in Permitted Investments in accordance with the
terms and provisions of the Cash Management Agreement. All interest on a Reserve
Fund shall not be added to or become a part thereof and shall be the sole
property of and shall be paid to Lender, except the Rollover Escrow Fund.
Borrower shall be responsible for payment of any federal, state or local income
or other tax applicable to the interest earned on the Reserve Funds credited or
paid to Borrower. Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in any
Reserve Fund or the monies deposited therein or permit any lien or encumbrance
to attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto. Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds. Borrower shall indemnify
Lender and hold Lender harmless from and against any and all actions, suits,
claims, demands, liabilities, losses, damages, obligations and costs and
expenses (including litigation costs and reasonable attorneys fees and expenses)
arising from or in any way connected with the Reserve Funds or the performance
of the obligations for which the Reserve Funds were established. Borrower shall
assign to Lender all rights and claims Borrower may have against all persons or
entities supplying labor, materials or other services which are to be paid from
or secured by the Reserve Funds; provided, however, that Lender may not pursue
any such right or claim unless an Event of Default has occurred and remains
uncured.
VIII. DEFAULTS
SECTION 8.1 EVENT OF DEFAULT. (a) Each of the following events
shall constitute an event of default hereunder (an "Event of Default"):
(i) if any portion of the Debt is not paid within five
(5) days of the date when due (except that Borrower shall not
be afforded such 5-day cure period for the portion of the Debt
due and payable on the Maturity Date);
(ii) if any of the Taxes (other than Taxes being
contested pursuant to Section 5.1.2 of this Agreement) are not
paid when the same are due and payable or Other Charges are
not paid within five (5) days after the date that the same are
due and payable;
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(iii) if the Policies are not kept in full force and
effect, or if certified copies of the Policies are not
delivered to Lender upon request;
(iv) if Borrower Transfers or otherwise encumbers any
portion of the Property without Lender's prior written consent
in violation of the provisions of this Agreement and Article 6
of the Mortgage;
(v) if any material representation or warranty made by
Borrower herein or in any other Loan Document, or in any
report, certificate, financial statement or other instrument,
agreement or document furnished to Lender shall have been
false or misleading in any material respect as of the date the
representation or warranty was made;
(vi) if Borrower, Principal, Guarantor or any other
guarantor under any guaranty issued in connection with the
Loan shall make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be
appointed for Borrower, Principal, Guarantor or any other
guarantor under any guarantee issued in connection with the
Loan or if Borrower, Principal, Guarantor or such other
guarantor 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, Principal, Guarantor or such other
guarantor, or if any proceeding for the dissolution or
liquidation of Borrower, Principal, Guarantor or such other
guarantor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, Principal,
Guarantor or such other guarantor, upon the same not being
discharged, stayed or dismissed within ninety (90) days;
(viii) if Borrower attempts to assign its rights under
this Agreement or any of the other Loan Documents or any
interest herein or therein in contravention of the Loan
Documents;
(ix) if Borrower breaches any covenant contained in
Section 4.1.30 hereof;
(x) with respect to any term, covenant or provision set
forth herein which specifically contains a notice requirement
or grace period, if Borrower shall be in default under such
term, covenant or condition after the giving of such notice or
the expiration of such grace period;
(xi) if any of the assumptions contained in the
Insolvency Opinion delivered to Lender in connection with the
Loan, or in any Additional Insolvency Opinion delivered
subsequent to the closing of the Loan, is or shall become
untrue in any material respect;
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(xii) if a material default has occurred and continues
beyond any applicable cure period under the Management
Agreement (or any Replacement Management Agreement) and if
such default permits the Manager thereunder to terminate or
cancel the Management Agreement (or any Replacement Management
Agreement);
(xiii) if Borrower shall continue to be in Default under
any of the terms, covenants or conditions of Section 9.1
hereof, or fails to cooperate with Lender in connection with a
Securitization pursuant to the provisions of Section 9.1
hereof, for three (3) days after notice to Borrower from
Lender;
(xiv) 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 (xii) above, for
twenty (20) 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
non-monetary Default is susceptible of cure but cannot
reasonably be cured within such thirty (30) day period and
provided further that Borrower shall have commenced to cure
such Default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to
exceed sixty (60) days; or
(xv) if there shall be default under any of the other
Loan Documents beyond any applicable cure periods contained in
such documents, whether as to Borrower or the Property, or if
any other such event shall occur or condition shall exist, if
the effect of such default, event or condition is to
accelerate the maturity of any portion of the Debt or to
permit Lender to accelerate the maturity of all or any portion
of the Debt.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Loan Documents or at law or in equity,
Lender may take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and the Property,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents against Borrower and any or all of the Property,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in clauses (vi), (vii) or (viii)
above, the Debt and 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.
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SECTION 8.2 REMEDIES. (a) 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 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 part of the Property. Any such actions
taken by Lender shall be cumulative and concurrent and may be pursued
independently, singularly, 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 Property and the Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.
(b) With respect to Borrower and the Property, nothing
contained herein or in any other Loan Document shall be construed as requiring
Lender to resort to the Property for the satisfaction of any of the Debt in any
preference or priority, and Lender may seek satisfaction out of the Property, or
any part thereof, in its absolute discretion in respect of the Debt. In
addition, Lender shall have the right from time to time to partially foreclose
the Mortgage in any manner and for any amounts secured by the Mortgage then due
and payable as determined by Lender in its sole discretion including, without
limitation, the following circumstances: (i) in the event Borrower defaults
beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the Mortgage to recover
such delinquent payments or (ii) in the event Lender elects to accelerate less
than the entire outstanding principal balance of the Loan, Lender may foreclose
the Mortgage to recover so much of the principal balance of the Loan as Lender
may accelerate and such other sums secured by the Mortgage as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and
not previously recovered.
(c) Lender shall have the right from time to time to sever the
Note and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender's intent to exercise its
rights under such power. Borrower shall be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents and the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.
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SECTION 8.3 REMEDIES CUMULATIVE; WAIVERS. 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 singularly, 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 by Borrower or to impair any remedy,
right or power consequent thereon.
IX. SPECIAL PROVISIONS
SECTION 9.1 SECURITIZATION.
9.1.1 SALE OF NOTES AND SECURITIZATION. Borrower acknowledges
and agrees that Lender may sell all or any portion of the Loan and the Loan
Documents, or issue one or more participations therein, or consummate one or
more private or public securitizations of rated single- or multi-class
securities (the "Securities") secured by or evidencing ownership interests in
all or any portion of the Loan and the Loan Documents or a pool of assets that
include the Loan and the Loan Documents (such sales, participations and/or
securitizations, collectively, a "Securitization"). At the request of Lender,
and to the extent not already required to be provided by or on behalf of
Borrower under this Agreement, Borrower shall use reasonable efforts to provide
information not in the possession of Lender or which may be reasonably required
by Lender or take other actions reasonably required by Lender, in each case in
order to satisfy the market standards to which Lender customarily adheres or
which may be reasonably required by prospective investors and/or the Rating
Agencies in connection with any such Securitization including, without
limitation, to:
(a) provide additional and/or updated Provided Information,
together with appropriate verification and/or consents related to the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys reasonably acceptable to Lender, prospective investors and/or the
Rating Agencies;
(b) assist in preparing descriptive materials for
presentations to any or all of the Rating Agencies, and work with, and if
requested, supervise, third-party service providers engaged by Borrower and
approved by Lender, Principal and their respective affiliates to obtain,
collect, and deliver information requested or required by Lender, prospective
investors and/or the Rating Agencies;
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(c) deliver (i) an Additional Insolvency Opinion and an
opinion with respect to, due execution and enforceability with respect to the
Property, Borrower, Principal, Guarantor and their respective Affiliates and the
Loan Documents, including, without limitation, a so called "10b-5" opinion, and
(ii) revised organizational documents for Borrower, which counsel opinions and
organizational documents shall be reasonably satisfactory to Lender, prospective
investors and/or the Rating Agencies;
(d) if required by any prospective investor and/or any Rating
Agency, use commercially reasonable efforts to deliver such additional tenant
estoppel letters, subordination agreements or other agreements from parties to
agreements that affect the Property, which estoppel letters, subordination
agreements or other agreements shall be reasonably satisfactory to Lender,
prospective investors and/or the Rating Agencies;
(e) make such representations and warranties as of the closing
date of the Securitization with respect to the Property, Borrower, Principal,
Guarantor and the Loan Documents as may be reasonably requested by Lender,
prospective investors and/or the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents;
(f) execute such amendments to the Loan Documents as may be
requested by Lender, prospective investors and/or the Rating Agencies to effect
the Securitization;
(g) if requested by Lender, review any information regarding
the Property, Borrower, Principal, Guarantor, Manager and the Loan which is
contained in a preliminary or final private placement memorandum, prospectus,
prospectus supplement (including any amendment or supplement to either thereof),
or other disclosure document to be used by Lender or any affiliate thereof; and
(h) supply to Lender such documentation, financial statements
and reports in form and substance required in order to comply with any
applicable securities laws.
9.1.2 LOAN COMPONENTS. Borrower covenants and agrees that in
connection with any Securitization of the Loan, upon Lender's request Borrower
shall deliver one or more new component notes to replace the original note or
modify the original note to reflect multiple components of the Loan or create
one or more mezzanine loans (including amending Borrower's organizational
structure to provide for one or more mezzanine borrowers) [or re-size the
Components of the Loan] (each a "RESIZING EVENT"). Lender agrees that such new
notes or modified note or mezzanine notes [or re-sized Components] shall
immediately after the Resizing Event have the same initial weighted average
coupon as the original note prior to such Resizing Event, notwithstanding that
such new notes or modified note or mezzanine notes or [re-sized Component] may,
in connection with the application of principal to such new notes or modified
note or mezzanine notes [or re-sized Components], subsequently cause the
weighted average spread of such new notes or modified note or mezzanine notes
[or re-sized Components] to change (but not increase, except that the weighted
average spread may subsequently increase due to involuntary prepayments or if an
Event of Default shall occur) and apply principal, interest rates and
amortization of the Loan between such new components and/or mezzanine loans in a
manner specified by Lender in its sole discretion such that the pricing and
marketability of the Securities and the size of each class of Securities and the
rating assigned to each such class by the Rating Agencies shall provide the most
favorable rating levels and achieve the optimum bond execution for the Loan. In
connection with any Resizing Event, Borrower covenants and agrees to modify the
Cash Management Agreement with respect to the newly created components and/or
mezzanine loans.
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9.1.3 SECURITIZATION COSTS. All reasonable third party costs
and expenses incurred by Borrower and Guarantor in connection with Borrower's
complying with requests made under this Section 9.1 (including, without
limitation, the fees and expenses of the Rating Agencies) shall be paid by
Lender.
SECTION 9.2 SECURITIZATION INDEMNIFICATION. (a) Borrower
understands that certain of the Provided Information may be included in
Disclosure Documents in connection with the Securitization and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.
(b) The Indemnifying Persons agree to provide, in connection
with the Securitization, an indemnification agreement (A) certifying that (i)
the Indemnifying Persons have carefully examined the Disclosure Documents,
including without limitation, the sections entitled "Risk Factors," "Special
Considerations," "Description of the Mortgages," "Description of the Mortgage
Loans and Mortgaged Property," "The Manager," "The Borrower" and "Certain Legal
Aspects of the Mortgage Loan," and (ii) such sections and such other information
in the Disclosure Documents (to the extent such information relates to or
includes any Provided Information or any information regarding the Properties,
Borrower, Manager and/or the Loan) (collectively with the Provided Information,
the "Covered Disclosure Information") do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, (B) jointly and severally indemnifying Lender, BSCMI (whether or
not it is the Lender), any Affiliate of BSCMI that has filed any registration
statement relating to the Securitization or has acted as the sponsor or
depositor in connection with the Securitization, any Affiliate of BSCMI that
acts as an underwriter, placement agent or initial purchaser of Securities
issued in the Securitization, any other co-underwriters, co-placement agents or
co-initial purchasers of Securities issued in the Securitization, and each of
their respective officers, directors, partners, employees, representatives,
agents and Affiliates and each Person or entity who Controls any such Person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the "Indemnified Persons"), for any losses, claims,
damages, liabilities, costs or expenses (including without limitation legal fees
and expenses for enforcement of these obligations (collectively, the
"Liabilities") to which any such Indemnified Person may become subject insofar
as the Liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Covered
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Disclosure Information or arise out of or are based upon the omission or alleged
omission to state in the Covered Disclosure Information a material fact required
to be stated therein or necessary in order to make the statements in the Covered
Disclosure Information, in light of the circumstances under which they were
made, not misleading and (C) agreeing to reimburse each Indemnified Person for
any legal or other expenses incurred by such Indemnified Person, as they are
incurred, in connection with investigating or defending the Liabilities. This
indemnity agreement will be in addition to any liability which Borrower may
otherwise have. Moreover, the indemnification and reimbursement obligations
provided for in clauses (B) and (C) above shall be effective, valid and binding
obligations of the Indemnifying Persons whether or not an indemnification
agreement described in clause (A) above is provided.
(c) In connection with Exchange Act Filings, the Indemnifying
Persons jointly and severally agree to indemnify (i) the Indemnified Persons for
Liabilities to which any such Indemnified Person may become subject insofar as
the Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact in the Covered Disclosure Information, or
the omission or alleged omission to state in the Covered Disclosure Information
a material fact required to be stated therein or necessary in order to make the
statements in the Covered Disclosure Information, in light of the circumstances
under which they were made, not misleading and (ii) reimburse each Indemnified
Person for any legal or other expenses incurred by such Indemnified Persons, as
they are incurred, in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an Indemnified Person of notice
of any claim or the commencement of any action, the Indemnified Person shall, if
a claim in respect thereof is to be made against any Indemnifying Person, notify
such Indemnifying Person in writing of the claim or the commencement of that
action; provided, however, that the failure to notify such Indemnifying Person
shall not relieve it from any liability which it may have under the
indemnification provisions of this Section 9.2 except to the extent that it has
been materially prejudiced by such failure and, provided further that the
failure to notify such Indemnifying Person shall not relieve it from any
liability which it may have to an Indemnified Person otherwise than under the
provisions of this Section 9.2. If any such claim or action shall be brought
against an Indemnified Person, and it shall notify any Indemnifying Person
thereof, such Indemnifying Person shall be entitled to participate therein and,
to the extent that it wishes, assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Person. After notice from any Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
claim or action, such Indemnifying Person shall not be liable to the Indemnified
Person for any legal or other expenses subsequently incurred by the Indemnified
Person in connection with the defense thereof except as provided in the
following sentence; provided, however, if the defendants in any such action
include both an Indemnifying Person, on the one hand, and one or more
Indemnified Persons on the other hand, and an Indemnified Person shall have
reasonably concluded that there are any legal defenses available to it and/or
other Indemnified Persons that are different or in addition to those available
to the Indemnifying Person, the Indemnified Person or Persons shall have the
right to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Person
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or Persons. The Indemnified Person shall instruct its counsel to maintain
reasonably detailed billing records for fees and disbursements for which such
Indemnified Person is seeking reimbursement hereunder and shall submit copies of
such detailed billing records to substantiate that such counsel's fees and
disbursements are solely related to the defense of a claim for which the
Indemnifying Person is required hereunder to indemnify such Indemnified Person.
No Indemnifying Person shall be liable for the expenses of more than one (1)
such separate counsel unless such Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another Indemnified Person.
(e) Without the prior written consent of BSCMI (which consent
shall not be unreasonably withheld or delayed), no Indemnifying Person shall
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless the
Indemnifying Person shall have given BSCMI reasonable prior written notice
thereof and shall have obtained an unconditional release of each Indemnified
Person hereunder from all liability arising out of such claim, action, suit or
proceedings. As long as an Indemnifying Person has complied with its obligations
to defend and indemnify hereunder, such Indemnifying Person shall not be liable
for any settlement made by any Indemnified Person without the consent of such
Indemnifying Person (which consent shall not be unreasonably withheld or
delayed).
(f) The Indemnifying Persons agree that if any indemnification
or reimbursement sought pursuant to this Section 9.2 is finally judicially
determined to be unavailable for any reason or is insufficient to hold any
Indemnified Person harmless (with respect only to the Liabilities that are the
subject of this Section 9.2), then the Indemnifying Persons, on the one hand,
and such Indemnified Person, on the other hand, shall contribute to the
Liabilities for which such indemnification or reimbursement is held unavailable
or is insufficient: (x) in such proportion as is appropriate to reflect the
relative benefits to the Indemnifying Persons, on the one hand, and such
Indemnified Person, on the other hand, from the transactions to which such
indemnification or reimbursement relates; or (y) if the allocation provided by
clause (x) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (x)
but also the relative faults of the Indemnifying Persons, on the one hand, and
all Indemnified Persons, on the other hand, as well as any other equitable
considerations. Notwithstanding the provisions of this Section 9.2, (A) no party
found liable for a fraudulent misrepresentation shall be entitled to
contribution from any other party who is not also found liable for such
fraudulent misrepresentation, and (B) the Indemnifying Persons agree that in no
event shall the amount to be contributed by the Indemnified Persons collectively
pursuant to this paragraph exceed the amount of the fees actually received by
the Indemnified Persons in connection with the closing of the Loan.
(g) The Indemnifying Persons agree that the indemnification,
contribution and reimbursement obligations set forth in this Section 9.2 shall
apply whether or not any Indemnified Person is a formal party to any lawsuits,
claims or other proceedings. The Indemnifying Persons further agree that the
Indemnified Persons are intended third party beneficiaries under this Section
9.2.
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(h) The liabilities and obligations of the Indemnified Persons
and the Indemnifying Persons under this Section 9.2 shall survive the
termination of this Agreement and the satisfaction and discharge of the Debt.
(i) Notwithstanding anything to the contrary contained herein,
Borrower shall have no obligation to act as depositor with respect to the Loan
or an issuer or registrant with respect to the Securities issued in any
Securitization.
SECTION 9.3 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, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, 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, the Mortgage and the other Loan Documents, or in the
Property, the Rents, or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage 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, the Mortgage or the other Loan Documents. 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 the Mortgage; (c) affect the
validity or enforceability of or any guaranty 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) impair the enforcement of
any of the Assignment of Leases; (f) constitute a prohibition against Lender to
seek a deficiency judgment against Borrower in order to fully realize the
security granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Property; or
(g) constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, 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 the following:
(i) fraud or intentional misrepresentation by Borrower
or Principal or Guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of
Borrower;
(iii) the breach of any representation, warranty,
covenant or indemnification provision in the Environmental
Indemnity Agreement or in the Mortgage concerning
environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either
document;
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(iv) the removal or disposal of any portion of the
Property after an Event of Default;
(v) the misapplication or conversion by Borrower of (A)
any Insurance Proceeds paid by reason of any loss, damage or
destruction to the Property, (B) any Awards received in
connection with a Condemnation of all or a portion of the
Property, (C) any Rents following an Event of Default, or (D)
any Rents paid more than one month in advance;
(vi) failure to pay charges for labor or materials or
other charges that can create Liens on any portion of the
Property; and
(vii) any security deposits, advance deposits or any
other deposits collected with respect to the Property which
are not delivered to Lender upon a foreclosure of the 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.
Notwithstanding anything to the contrary in this Agreement,
the Note or any of the Loan Documents, (A) Lender shall not be deemed to have
waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the Bankruptcy Code to file a claim for the full amount
of the Debt secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan
Documents, and (B) the Debt shall be fully recourse to Borrower (i) in the event
of: (a) Borrower filing a voluntary petition under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law; (b) the filing of an
involuntary petition against Borrower under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, in which Borrower colludes with,
or otherwise assists such Person, or solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower from any
Person; (c) Borrower filing an answer consenting to or otherwise acquiescing in
or joining in any involuntary petition filed against it, by any other Person
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (d) Borrower consenting to or acquiescing in or joining in an application
for the appointment of a custodian, receiver, trustee, or examiner for Borrower
or any portion of the Property; (e) Borrower making an assignment for the
benefit of creditors, or admitting, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due; (ii) if the first
full monthly payment of principal and interest on the Note is not paid when due;
(iii) if Borrower fails to permit on-site inspections of the Property, fails to
provide financial information, fails to maintain its status as a Single Purpose
Entity or fails to appoint a new property manager upon the request of Lender as
permitted under this Agreement, each as required by, and in accordance with, the
terms and provisions of this Agreement or the Mortgage; (iv) if Borrower fails
to obtain Lender's prior written consent to any Indebtedness or voluntary Lien
encumbering the Property; or (v) if Borrower fails to obtain Lender's prior
written consent to any Transfer as required by this Agreement or the Mortgage.
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SECTION 9.4 MATTERS CONCERNING MANAGER. If (a) an Event of
Default occurs, (b) Manager shall become bankrupt or insolvent or (c) a default
occurs under the Management Agreement, Borrower shall, at the request of Lender,
terminate the Management Agreement and replace the Manager with a Qualified
Manager pursuant to a Replacement Management Agreement, it being understood and
agreed that the management fee for such Qualified Manager shall not exceed then
prevailing market rates.
SECTION 9.5 SERVICER. At the option of Lender, the Loan may be
serviced by a servicer/trustee (any such servicer/trustee, together with its
agents, nominees or designees, are collectively referred to as "Servicer")
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to Servicer
pursuant to a servicing agreement (the "Servicing Agreement") between Lender and
Servicer. Borrower shall be responsible for any reasonable set-up fees or any
other initial costs relating to or arising under the Servicing Agreement;
provided, however, that Borrower shall not be responsible for payment of the
monthly servicing fee due to Servicer under the Servicing Agreement.
X. MISCELLANEOUS
SECTION 10.1 SURVIVAL. This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect so long as all or any of the Debt is outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan Documents.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the legal representatives, successors and
assigns of such party. All covenants, promises and agreements in this Agreement,
by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
SECTION 10.2 LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
SECTION 10.3 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK,
THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK,
AND THE PROCEEDS OF THE LOAN 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, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE
OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER 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 (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS) 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 LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
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ACCORDING TO THE LAW OF THE STATE IN WHICH THE 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 CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE 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, THE NOTE AND THE OTHER LOAN
DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS 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 OR THE OTHER LOAN
DOCUMENTS MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW
OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS 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:
Corporation Service Company
2711 Centerville Road, Suite 400
Wilmington, DE 19808
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
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 SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND 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.
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SECTION 10.4 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 10.5 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 10.6 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, return
receipt requested or (b) expedited prepaid delivery service, either commercial
or United States Postal Service, with proof of attempted delivery, and by
telecopier (with answer back acknowledged), addressed as follows (or at such
other address and Person as shall be designated from time to time by any party
hereto, as the case may be, in a written notice to the other parties hereto in
the manner provided for in this Section):
If to Lender: Bear Stearns Commercial Mortgage, Inc.
383 Madison Avenue
New York, New York 10179
Attention: J. Christopher Hoeffel
Facsimile No.: (212) 272-7047
with a copy to: Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attention: Paul A. Keenan, Esq.
Facsimile No.: (212) 808-7897
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If to Borrower: c/o Acadia Realty Trust
1311 Mamaroneck Avenue, Suite 260
White Plains, New York 10605
Attention: Mr. Michael Nelsen, Chief
Financial Officer
Facsimile No.: (914) 288.2162
With a copy to: Acadia Realty Trust
1311 Mamaroneck Avenue, Suite 260
White Plains, New York 10605
Attention: Robert Masters, Esq., General
Counsel
Facsimile No.: (914) 288.2162
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender's receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming.
SECTION 10.7 TRIAL BY JURY.
BORROWER 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 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 IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
SECTION 10.8 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 10.9 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.
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SECTION 10.10 PREFERENCES. 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 10.11 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 10.12 REMEDIES OF BORROWER. In the event that a claim
or adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents 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. 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 10.13 EXPENSES; INDEMNITY. (a) Borrower covenants and
agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon receipt of
written notice from Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Lender in connection
with (i) the preparation, negotiation, execution and delivery of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Property); (ii) 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, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender's ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Lender; (v) securing Borrower's compliance
with any requests made pursuant to the provisions of this Agreement; (vi) the
filing and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Lien in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) 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
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against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property, or any other security given for the Loan; and (viii) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property (including
any fees incurred by Servicer in connection with the transfer of the Loan to a
special servicer prior to a Default or Event of Default) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that 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
cost and expenses due and payable to Lender may be paid from any amounts in the
Lockbox Account or Cash Management Account, as applicable.
(b) Borrower shall indemnify, defend 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, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
(c) Borrower covenants and agrees to pay for or, if Borrower
fails to pay, to reimburse Lender for, any fees and expenses incurred by any
Rating Agency in connection with any Rating Agency review of the Loan, the Loan
Documents or any transaction contemplated thereby or any consent, approval,
waiver or confirmation obtained from such Rating Agency pursuant to the terms
and conditions of this Agreement or any other Loan Document and Lender shall be
entitled to require payment of such fees and expenses as a condition precedent
to the obtaining of any such consent, approval, waiver or confirmation.
SECTION 10.14 SCHEDULES INCORPORATED. The 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 10.15 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.
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SECTION 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES. (a) 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 Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and 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 10.17 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, BSCMI, or any of their Affiliates shall be
subject to the prior written approval of Lender.
SECTION 10.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest
extent permitted by law, Borrower, for itself and its successors and assigns,
waives all rights to a marshalling of the assets of Borrower, Borrower's
partners and others with interests in Borrower, and of the Property, 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 Property
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of the Property in preference to every other claimant whatsoever.
SECTION 10.19 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.
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SECTION 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
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 competent counsel in
connection with the negotiation, drafting and execution 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. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
SECTION 10.21 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 agrees to indemnify, defend and
hold Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind (including Lender's attorneys' fees and expenses) in any
way relating to or arising from a claim by any Person that such Person acted on
behalf of Borrower or Lender in connection with the transactions contemplated
herein. The provisions of this Section 10.21 shall survive the expiration and
termination of this Agreement and the payment of the Debt.
SECTION 10.22 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, including,
without limitation, the Application Letter dated October 28, 2005 (as amended)
between Borrower and Lender are superseded by the terms of this Agreement and
the other Loan Documents.
SECTION 10.23 JOINT AND SEVERAL LIABILITY. If Borrower
consists of more than one (1) Person the obligations and liabilities of each
Person shall be joint and several.
SECTION 10.24 CERTAIN ADDITIONAL RIGHTS OF LENDER (VCOC).
Notwithstanding anything to the contrary contained in this Agreement, Lender
shall have:
(a) the right to routinely consult with and advise Borrower's
management regarding the significant business activities and business and
financial developments of Borrower; provided, however, that such consultations
shall not include discussions of environmental compliance programs or disposal
of hazardous substances. Consultation meetings should occur on a regular basis
(no less frequently than quarterly) with Lender having the right to call special
meetings at any reasonable times and upon reasonable advance notice;
(b) the right, in accordance with the terms of this Agreement,
to examine the books and records of Borrower at any reasonable times upon
reasonable notice;
91
(c) the right, in accordance with the terms of this Agreement,
including, without limitation, Section 5.1.11 hereof, to receive monthly,
quarterly and year end financial reports, including balance sheets, statements
of income, shareholder's equity and cash flow, a management report and schedules
of outstanding indebtedness; and
(d) the right, without restricting any other rights of Lender
under this Agreement (including any similar right), to approve any acquisition
by Borrower of any other significant property (other than personal property
required for the day to day operation of the Property).
The rights described above in this Section 10.24 may be exercised by any entity
which owns and controls, directly or indirectly, substantially all of the
interests in Lender.
SECTION 10.25 MERS. Mortgage Electronic Registration Systems,
Inc., a Delaware corporation ("MERS"), serves as mortgagee of record and secured
party solely as nominee, in an administrative capacity, for Lender and only
holds legal title to the interests granted, assigned, and transferred in the
Security Instruments and the Assignments of Leases. MERS shall at all times
comply with the instructions of Lender. If necessary to comply with law or
custom, MERS (for the benefit of Lender) may be directed by Lender to exercise
any or all of those interests, including without limitation, the right to
foreclose and sell the Property, and take any action required of Lender,
including without limitation, a release, discharge or reconveyance of the
Mortgage. Subject to the foregoing, all references in the Loan Documents to
"Mortgagee" shall include Lender and its successors and assigns. The
relationship of Mortgagor and Lender under the Mortgage and the other Loan
Documents is, and shall at all times remain, solely that of borrower and lender
(the role of MERS thereunder being solely that of nominee as set forth above and
not that of a lender); and Mortgagee neither undertakes nor assumes any
responsibility or duty to Borrower or to any other Person with respect to the
Property.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
RD ELMWOOD ASSOCIATES, L.P.,
a Delaware limited partnership
BY: Acadia Elmwood Park LLC,
Its general partner
By:___________________________
Name: Robert Masters
Title: Senior Vice President
BEAR STEARNS COMMERCIAL MORTGAGE, INC.,
a New York corporation
By:___________________________________________________
Name:
Title:
93
JOINDER
By executing this Joinder (the "Joinder"), the undersigned
("Joinder Parties") hereby covenant, warrant and agree to comply with all of the
terms and conditions set forth in Section 9.2 hereof.
1. WAIVERS. With respect to the obligations of the Joinder
Parties pursuant to Section 9.2 hereof, to the fullest extent permitted by
applicable law, each Joinder Party waives all rights and defenses of sureties,
guarantors, accommodation parties and/or co-makers and agrees that its
obligations under this Joinder shall be primary, absolute and unconditional, and
that its obligations under this Joinder shall be unaffected by any of such
rights or defenses, including:
(a) the unenforceability of any Loan Document against Borrower
and/or any guarantor or other Joinder Party;
(b) any release or other action or inaction taken by Lender
with respect to the collateral, the Loan, Borrower, any guarantor and/or other
Joinder Party, whether or not the same may impair or destroy any subrogation
rights of any Joinder Party, or constitute a legal or equitable discharge of any
surety or indemnitor;
(c) the existence of any collateral or other security for the
Loan, and any requirement that Lender pursue any of such collateral or other
security, or pursue any remedies it may have against Borrower, any guarantor
and/or any other Joinder Party;
(d) any requirement that Lender provide notice to or obtain a
Joinder Party's consent to any modification, increase, extension or other
amendment of the Loan, including the guaranteed obligations;
(e) any right of subrogation (until payment in full of the
Loan, including the guaranteed obligations, and the expiration of any applicable
preference period and statute of limitations for fraudulent conveyance claims);
(f) any defense based on any statute of limitations;
(g) any payment by Borrower to Lender if such payment is held
to be a preference or fraudulent conveyance under bankruptcy laws or Lender is
otherwise required to refund such payment to Borrower or any other party; and
(h) any voluntary or involuntary bankruptcy, receivership,
insolvency, reorganization or similar proceeding affecting Borrower or any of
its assets.
2. AGREEMENTS. With respect to the obligations of the Joinder
Parties pursuant to Section 9.2 hereof, each Joinder Party further represents,
warrants and agrees that:
(a) The obligations under this Joinder are enforceable against
each such party and are not subject to any defenses, offsets or counterclaims;
(b) The provisions of this Joinder are for the benefit of
Lender and its successors and assigns;
(c) Lender shall have the right to (i) renew, modify, extend
or accelerate the Loan, (ii) pursue some or all of its remedies against
Borrower, any guarantor or any Joinder Party, (iii) add, release or substitute
any collateral for the Loan or party obligated thereunder, and (iv) release
Borrower, any guarantor or any Joinder Party from liability, all without notice
to or consent of any Joinder Party (or other Joinder Party) and without
affecting the obligations of any Joinder Party (or other Joinder Party)
hereunder;
(d) To the maximum extent permitted by law, each Joinder Party
hereby knowingly, voluntarily and intentionally waives the right to a trial by
jury in respect of any litigation based hereon. This waiver is a material
inducement to Lender to enter into this Agreement.
This Joinder shall be governed by the laws of the State of New
York.
Executed as of December ____, 2005.
ACADIA REALTY LIMITED PARTNERSHIP
a Delaware limited partnership
By: Acadia Realty Trust,
its general partner
By:___________________________
Name:
Title:
2
SCHEDULE I
(RENT ROLL)
SCH I-1
SCHEDULE II
(REQUIRED REPAIRS - DEADLINES FOR COMPLETION)
- ------------------------------------------------------------------------------------------------------------------------
Repair Deadline
Item Quantity Unit Cost Immediate Cost for Completion
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- --------------------------------------------- ------------------ ------------------ ------------------ -----------------
- ------------------------------------------------------------------------------------------------------------------------
SCH II-1
SCHEDULE III
(ORGANIZATIONAL CHART OF BORROWER)
---------------------------------------------------------------------------------
RD ELMWOOD ASSOCIATES, L.P.
a Delaware limited partnership
---------------------------------------------------------------------------------
| |
| |
| |
General Partner Limited Partner
(1%) (99%)
| |
| |
- ------------------------------------ --------------------------------------
ACADIA ELMWOOD PARK LLC ACADIA REALTY LIMITED PARTNERSHIP
a Delaware limited liability company a Delaware limited partnership
- ------------------------------------ --------------------------------------
| | |
| | |
Sole Member General Partner Limited Partners
| (98%) (2%)
| | |
| | |
-------------------------- ------------------------ ---------------------
ACADIA REALTY LIMITED ACADIA REALTY TRUST
PARTNERSHIP a Maryland real estate INDIVIDUAL INVESTORS
investment trust
-------------------------- ------------------------ ---------------------
| |
| |
General Partner Limited Partners
(98%) (2%)
| |
| |
- ----------------- ----------------
ACADIA REALTY INDIVIDUAL
TRUST INVESTORS
- ----------------- ----------------
SCH III-1
SCHEDULE 5.1.11(E)
(BORROWER'S 2006 ANNUAL BUDGET)
2