Exhibit 10.58
LOAN AGREEMENT
Dated as of September 8, 2006
Between
RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP,
as Borrower
and
MERRILL LYNCH MORTGAGE LENDING, INC.,
as Lender
TABLE OF CONTENTS
PAGE
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ARTICLE 1 - DEFINITIONS; PRINCIPLES OF CONSTRUCTION...................... 1
Section 1.1 Definitions ............................................... 1
Section 1.2 Principles of Construction ................................ 13
ARTICLE 2 - GENERAL TERMS ............................................. 14
Section 2.1 Loan Commitment; Disbursement to Borrower ................. 14
Section 2.2 Interest Rate ............................................. 14
Section 2.3 Loan Payments ............................................. 14
Section 2.4 Late Payment Charge........................................ 16
Section 2.5 Reserved................................................... 16
Section 2.6 Prepayment; Defeasance .................................... 16
Section 2.7 Payments after Default..................................... 20
Section 2.8 Usury Savings ............................................. 20
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES .............................. 21
Borrower represents and warrants to Lender as of the Closing Date that:.. 21
Section 3.1 Organization............................................... 21
Section 3.2 Status of Borrower ........................................ 21
Section 3.3 Validity of Documents...................................... 21
Section 3.4 No Conflicts .............................................. 22
Section 3.5 Litigation................................................. 22
Section 3.6 Agreements ................................................ 22
Section 3.7 Solvency................................................... 22
Section 3.8 Full and Accurate Disclosure .............................. 23
Section 3.9 No Plan Assets ............................................ 23
Section 3.10 Not a Foreign Person ...................................... 23
Section 3.11 Enforceability............................................. 23
Section 3.12 Business Purposes.......................................... 23
Section 3.13 Compliance ................................................ 24
Section 3.14 Financial Information...................................... 24
Section 3.15 Title ..................................................... 24
Section 3.16 Condemnation .............................................. 25
Section 3.17 Utilities and Public Access; Parking....................... 25
Section 3.18 Separate Lots.............................................. 25
Section 3.19 Assessments ............................................... 25
Section 3.20 Insurance ................................................. 25
Section 3.21 Use of Property ........................................... 25
Section 3.22 Certificate of Occupancy; Licenses......................... 25
Section 3.23 Flood Zone................................................. 26
Section 3.24 Physical Condition ........................................ 26
Section 3.25 Boundaries ................................................ 26
Section 3.26 Leases and Rent Roll ...................................... 26
Section 3.27 Filing and Recording Taxes ................................ 27
Section 3.28 Intentionally Omitted ..................................... 27
Section 3.29 Illegal Activity .......................................... 27
Section 3.30 Construction Expenses...................................... 27
Section 3.31 Personal Property ......................................... 27
Section 3.32 Taxes ..................................................... 28
Section 3.33 Federal Reserve Regulations................................ 28
Section 3.34 Investment Company Act .................................... 28
Section 3.35 No Change in Facts or Circumstances; Disclosure............ 28
Section 3.36 Intellectual Property...................................... 28
Section 3.37 Compliance with Anti-Terrorism Laws ....................... 29
Section 3.38 Brokers and Financial Advisors............................. 29
Section 3.39 Survival .................................................. 29
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ARTICLE 4 - BORROWER COVENANTS .......................................... 29
Section 4.1 Existence; Compliance with Legal Requirements ............. 29
Section 4.2 Maintenance and Use of Property............................ 30
Section 4.3 Waste...................................................... 30
Section 4.4 Taxes and Other Charges.................................... 30
Section 4.5 Litigation................................................. 31
Section 4.6 Access to Property ........................................ 31
Section 4.7 Notice of Default.......................................... 31
Section 4.8 Cooperate in Legal Proceedings ............................ 32
Section 4.9 Performance by Borrower.................................... 32
Section 4.10 Awards; Insurance Proceeds ................................ 32
Section 4.11 Financial Reporting........................................ 32
Section 4.12 Estoppel Statement......................................... 33
Section 4.13 Leasing Matters............................................ 33
Section 4.14 Property Management........................................ 35
Section 4.15 Liens...................................................... 36
Section 4.16 Debt Cancellation.......................................... 36
Section 4.17 Zoning..................................................... 36
Section 4.18 ERISA...................................................... 36
Section 4.19 No Joint Assessment........................................ 37
Section 4.20 Patriot Act................................................ 37
Section 4.21 Alterations................................................ 37
Section 4.22 Parking Re-Striping........................................ 38
Section 4.23 Utility Easement........................................... 38
ARTICLE 5 - ENTITY COVENANTS............................................. 38
Section 5.1 Single Purpose Entity/Separateness......................... 38
Section 5.2 Change of Name, Identity or Structure ..................... 42
Section 5.3 Business and Operations.................................... 42
Section 5.4 Independent Director ...................................... 42
ARTICLE 6 - NO SALE OR ENCUMBRANCE .................................... 43
Section 6.1 Transfer Definitions....................................... 43
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Section 6.2 No Sale/Encumbrance........................................ 43
Section 6.3 Permitted Transfers........................................ 44
Section 6.4 Lender's Rights............................................ 45
Section 6.5 Assumption ................................................ 45
ARTICLE 7 - INSURANCE; CASUALTY; CONDEMNATION; RESTORATION ............ 47
Section 7.1 Insurance ................................................. 47
Section 7.2 Casualty................................................... 51
Section 7.3 Condemnation............................................... 51
Section 7.4 Restoration ............................................... 51
ARTICLE 8 - RESERVE FUNDS ............................................... 55
Section 8.1 Required Repairs........................................... 55
Section 8.2 Replacements .............................................. 56
Section 8.3 Intentionally Omitted...................................... 56
Section 8.4 Required Work.............................................. 56
Section 8.5 Release of Reserve Funds................................... 58
Section 8.6 Tax and Insurance Reserve Funds ........................... 59
Section 8.7 Intentionally Omitted...................................... 60
Section 8.8 Intentionally Omitted...................................... 60
Section 8.9 Initial Debt Service Reserve .............................. 60
Section 8.10 Woonsocket Bowling Reserve................................. 61
Section 8.11 Intentionally Omitted...................................... 61
Section 8.12 Reserve Funds, Generally .................................. 61
ARTICLE 9 - INTENTIONALLY OMITTED ....................................... 62
ARTICLE 10 - EVENTS OF DEFAULT; REMEDIES................................. 62
Section 10.1 Event of Default........................................... 62
Section 10.2 Remedies .................................................. 64
ARTICLE 11 - ENVIRONMENTAL PROVISIONS ................................... 65
Section 11.1 Environmental Representations and Warranties .............. 65
Section 11.2 Environmental Covenants.................................... 65
Section 11.3 Lender's Rights............................................ 66
Section 11.4 Operations and Maintenance Programs ....................... 67
ARTICLE 12 - SECONDARY MARKET ........................................... 67
Section 12.1 Transfer of Loan .......................................... 67
Section 12.2 Delegation of Servicing ................................... 67
Section 12.3 Dissemination of Information............................... 67
Section 12.4 Cooperation................................................ 68
Section 12.5 Intentionally Omitted...................................... 69
ARTICLE 13 - INDEMNIFICATIONS ........................................... 69
Section 13.1 General Indemnification ................................... 69
Section 13.2 Mortgage and Intangible Tax Indemnification ............... 70
Section 13.3 ERISA Indemnification ..................................... 70
Section 13.4 Environmental Indemnity ................................... 70
Section 13.5 Survival................................................... 70
ARTICLE 14 - EXCULPATION ............................................... 71
Section 14.1 Exculpation ............................................... 71
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ARTICLE 15 - NOTICES ................................................... 73
Section 15.1 Notices ................................................... 73
ARTICLE 16 - FURTHER ASSURANCES ........................................ 74
Section 16.1 Replacement Documents ..................................... 74
Section 16.2 Recording of Mortgage, Etc................................. 74
Section 16.3 Further Acts, Etc.......................................... 74
Section 16.4 Changes in Tax, Debt, Credit and Documentary Stamp Laws ... 75
Section 16.5 Expenses .................................................. 75
ARTICLE 17 - WAIVERS ................................................... 76
Section 17.1 Remedies Cumulative; Waivers............................... 76
Section 17.2 Modification, Waiver in Writing ........................... 76
Section 17.3 Delay Not a Waiver ........................................ 76
Section 17.4 Trial by Jury.............................................. 77
Section 17.5 Waiver of Notice........................................... 77
Section 17.6 Remedies of Borrower....................................... 77
Section 17.7 Waiver of Marshalling of Assets ........................... 78
Section 17.8 Waiver of Statute of Limitations........................... 78
Section 17.9 Waiver of Counterclaim..................................... 78
ARTICLE 18 - GOVERNING LAW ............................................. 78
Section 18.1 Governing Law.............................................. 78
Section 18.2 Severability .............................................. 78
Section 18.3 Preferences................................................ 78
ARTICLE 19 - MISCELLANEOUS ............................................. 79
Section 19.1 Survival .................................................. 79
Section 19.2 Lender's Discretion........................................ 79
Section 19.3 Headings .................................................. 79
Section 19.4 Schedules and Exhibits Incorporated........................ 79
Section 19.5 Offsets, Counterclaims and Defenses ....................... 79
Section 19.6 No Joint Venture or Partnership; No Third Party
Beneficiaries ........................................................ 80
Section 19.7 Publicity ................................................. 81
Section 19.8 Conflict; Construction of Documents; Reliance.............. 81
Section 19.9 Duplicate Originals; Counterparts.......................... 81
Section 19.10 Entire Agreement .......................................... 81
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 8, 2006 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware
corporation having an address at 4 World Financial Center, 16th Floor, New York,
New York 10080 (together with its successors and/or assigns, "Lender") and RD
WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership,
having an address at c/o Acadia Realty Trust, 1311 Mamaroneck Avenue, White
Plains, New York 10605 (together with its successors and/or assigns,
"BORROWER").
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
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 (defined below).
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:
ARTICLE 1 - 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:
"Act" shall have the meaning set forth in Section 5.1 (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. Such term shall include Guarantor unless otherwise specified or if
the context may otherwise require.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 6.1 hereof
"ALTA" shall mean American Land Title Association, or any successor thereto.
"ALTERATION THRESHOLD" means $750,000.00.
"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.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday, any other day on
which banks are required or authorized to close in New York, New York, or the
place of business of any servicer servicing the Loan.
"Casualty" shall have the meaning set forth in Section 7.2 hereof. "CLOSING
DATE" shall mean the date of this Agreement. "CONTROL" shall have the meaning
set forth in Section 6.1 hereof.
"CONDEMNATION" shall mean a temporary or permanent taking by any Governmental
Authority as the result, 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 7.4(b)
hereof
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person, any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, assignment for the benefit of creditors,
composition or other relief with respect to its debts or debtors.
"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 due to Lender in respect of the Loan under the Note,
this Agreement, the Security Instrument or any other Loan Document.
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"DEBT SERVICE" shall mean, with respect to any particular period of time,
scheduled principal and/or interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of determination, for
the applicable period of calculation, the ratio, as determined by Lender, of (i)
Net Operating Income to (ii) the aggregate amount of actual Debt Service due for
the same period.
"DEFAULT" shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would be an Event of Default.
"DEFAULT RATE" shall mean a rate per annum equal to the lesser of (a) four
percent (4%) plus the Interest Rate and (b) the Maximum Legal Rate.
"DEFIANCE COLLATERAL" shall have the meaning set forth in Section
2.6(b)(i)(D)(2) hereof.
"DEFIANCE EVENT" shall have the meaning set forth in Section 2.6(b)(i) hereof.
"DEFEASANCE SECURITY AGREEMENT" shall have the meaning set forth in Section
2.6(b)(i)(D)(1) hereof.
"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. Section
9.10(b), having in either case a combined capital surplus of at least
$50,000,000 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
insured by the Federal Deposit Insurance Corporation, the short term unsecured
debt obligations or commercial paper of which are rated at least "A-l" 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 mean any Person identified by OFAC or any other Person
with whom a Person resident in the United States of America may not conduct
business or transactions by prohibition of federal law or Executive Order of the
President of the United States of America.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental Indemnity
Agreement, dated as of the date hereof, executed by Borrower 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.
2
"ENVIRONMENTAL LAW" shall mean any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, standards, policies, orders and
other government directives or requirements, as well as common law, including
but not limited to the Comprehensive Environmental Response, Compensation and
Liability Act and the Resource Conservation and Recovery Act, that apply to
Borrower or the Property and relate to Hazardous Materials or protection of
human health or the environment.
"ENVIRONMENTAL LIENS" shall mean all Liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other Person.
"ENVIRONMENTAL REPORT" shall mean that certain written report dated August 24,
2006 and prepared by EBI Consulting and certified to Lender resulting from the
environmental site assessments of the Property delivered to Lender in connection
with the Loan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statutes thereto and the
regulations promulgated and the rulings issued thereunder.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 10.1 hereof.
"Fitch" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in the United States
of
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America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, department,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) whether now or hereafter in existence.
"GUARANTOR" shall mean Acadia Realty Limited Partnership, a Delaware limited
partnership.
"GUARANTY" shall mean that certain Guaranty of Recourse Obligations, dated as of
the date hereof, executed by 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.
"HAZARDOUS MATERIALS" shall mean any petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives,
flammable materials; radioactive materials; polychlorinated biphenyls and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials; underground or above-ground storage tanks,
whether empty or containing any substance; toxic mold; any substance the
presence of which on the Property is prohibited by any federal, state or local
authority; any substance that requires special handling; and any other material
or substance now or in the future defined as a "hazardous substance," "hazardous
material" "hazardous waste" "toxic substance" "toxic pollutant", "contaminant",
or "pollutant" within the meaning of any Environmental Law.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of the
Security Instrument.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or holder of
the Loan or Participations in the Loan, (c) any servicer or prior servicer of
the Loan, (d) any Investor or any prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (I) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates or subsidiaries of any and all of the foregoing, and
(h) the heirs, legal representatives, successors and assigns of any and all of
the foregoing (including, without limitation, any successors by merger,
consolidation or acquisition of all or a substantial portion of the Indemnified
Parties' assets and business.
hereof
hereof.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section 5.4 hereof.
"INITIAL DEBT SERVICE RESERVE ACCOUNT" shall have the meaning set forth in
Section 8.9
"INITIAL DEBT SERVICE RESERVE FUNDS" shall have the meaning set forth in Section
8.9
"INSOLVENCY OPINION" shall mean, that certain bankruptcy non-consolidation
opinion
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letter delivered by counsel for Borrower in connection with the Loan and
approved by Lender or the Rating Agencies, as the case may be.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 7.1(b) hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 7.4(b) hereof.
"INTEREST RATE" shall mean an interest rate equal to six and sixty three
thousandths percent (6.063%) per annum.
"INTERNAL REVENUE 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.
"INVESTOR" shall have the meaning set forth in Section 12.3 hereof. "Lease"
shall have the meaning set forth in the Security Instrument.
"LEGAL REQUIREMENTS" shall mean all 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, whether now or hereafter enacted and in force, and all
permits, licenses, 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 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.
"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.
"LLC AGREEMENT" shall have the meaning set forth in Section 5.1(c) hereof
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Security Instrument, the Environmental Indemnity, the Assignment of Management
Agreement, the Guaranty and any and all other documents, agreements and
certificates executed and/or delivered in connection with the Loan, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
"LOCKOUT PERIOD" shall mean the period commencing on the Closing Date and ending
on the day immediately prior to the Scheduled Payment Date that is four (4)
months prior to the
5
Maturity Date.
"Losses" shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, fines, penalties, charges, fees, judgments,
awards, amounts paid in settlement of whatever kind or nature (including but not
limited to legal fees and other costs of defense).
"MAIOR LEASE" shall mean any Lease which individually or when aggregated with
all other Leases at the Property with the same Tenant or its Affiliates demises
more than 15,000 square feet at the Property.
"MANAGEMENT AGREEMENT" shall have the meaning set forth in Section 4.14(a)
hereof
"Manager" shall mean any entity selected as the manager of the Property in
accordance with the terms of this Agreement.
"MATURITY DATE" shall mean October 1, 2016 or such other date on which the final
payment of the 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.
"MEMBER" shall have the meaning set forth in Section 5.1(c) hereof.
"MONTHLY PAYMENT AMOUNT" shall have the meaning set forth in Section 2.3(a)(ii)
hereof
"MOODY'S ' shall mean Moody's Investors Service, Inc.
"NET OPERATING INCOME" shall mean, with respect to any period of time, the
amount obtained by subtracting Operating Expenses from Operating Income, as such
amount may be adjusted by Lender in its good faith discretion based on Lender's
underwriting standards, including without limitation, adjustments for vacancy
allowance.
"NET PROCEEDS" shall have the meaning set forth in Section 7.4(b) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section 7.4(b)(vi)
hereof.
"NOTE" shall mean that certain promissory note of even date herewith in the
principal amount of $23,500,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"OFAC" shall have the meaning set forth in Section 3.37 hereof.
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"OPERATING EXPENSES" shall mean, with respect to any period of time, all
expenses, computed in accordance with GAAP, directly attributable to the
operation, repair and/or maintenance of the Property including, without
limitation, (a) Taxes and Other Charges, (b) Insurance Premiums, (c) management
fees, whether or not actually paid, equal to the greater of the actual
management fees and four percent (4%) of annual "base" or "fixed" Rent due under
the Leases and (d) costs attributable to the operation, repair and maintenance
of the systems for heating, ventilating and air conditioning the Improvements
and actually paid for by Borrower. Operating Expenses shall not include
interest, principal and premium, if any, due under the Note or otherwise in
connection with the Debt, income taxes, extraordinary capital improvement costs,
any non-cash charge or expense such as depreciation or amortization.
"OPERATING INCOME" shall mean, with respect to any period of time, all income,
computed in accordance with GAAP, derived from the ownership and operation of
the Property from whatever source, including, but not limited to, Rents, utility
charges, escalations, forfeited security deposits, interest on credit accounts,
service fees or charges, license fees, parking fees, rent concessions or
credits, and other required pass-throughs but excluding 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, interest income from any source other than the escrow
accounts, Reserve Accounts or other accounts required pursuant to the Loan
Documents, Insurance Proceeds (other than business interruption or other loss of
income insurance), Awards, percentage rent, unforfeited security deposits,
utility and other similar deposits, income from tenants not paying rent, income
from tenants in bankruptcy, non-recurring or extraordinary income, including,
without limitation lease termination payments, and any disbursements to Borrower
from the Reserve Accounts.
"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.
"PARTICIPATIONS" shall have the meaning set forth in Section 12.1 hereof.
"PATRIOT ACT" shall have the meaning set forth in Section 3.37 hereof.
"PERMITTED DEFEASANCE DATE" shall mean the date that is the earlier of (a) three
years from the Closing Date or (b) two (2) years from the "startup day" within
the meaning of Section 860G(a)(9) of the Internal Revenue Code of any REMIC
Trust that holds the Note.
"PERMITTED ENCUMBRANCES" shall mean collectively, (a) the Lien 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.
"PERMITTED INVESTMENTS" shall mean to the extent available from Lender or
Lender's servicer for deposits in the Reserve Accounts, any one or more of the
following obligations or securities acquired at a purchase price of not greater
than par, including those issued by a
7
servicer of the Loan, the trustee under any securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the date on which the funds used to
acquire such investment are required to be used under this Agreement and meeting
one of the appropriate standards set forth below:
(a) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations o^ the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) be rated "AAA" or the equivalent by each of the Rating Agencies,
(iii) if rated by S&P, must not have an "r" highlighter affixed to their rating,
(iv) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (v) such investments must not be
subject to liquidation prior to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government sponsored agencies:
Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(d) federal funds, unsecured certificates of deposit, time deposits, bankers'
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency in the highest short
term rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (i) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (ii) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (iii) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers' acceptances with maturities of
not more than 365 days issued by, any bank or trust company, savings and loan
association or savings bank, the short term obligations of which at all times
are rated in the highest short term rating category by each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency in the
highest short term rating category and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities); provided, however,
that the investments described in this clause must (i) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (ii) if
rated by S&P, must not have an "r" highlighter affixed to their rating, (iii)
____ such investments have a
8
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(f) debt obligations with maturities of not more than 365 days and at all times
rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest long-term unsecured
rating category; provided, however, that the investments described in this
clause must (i) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(g) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 365 days and that at all times is rated by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(h) units of taxable money market funds or mutual funds with maturities of not
more than 365 days, which funds are regulated investment companies, seek to
maintain a constant net asset value per share and invest solely in obligations
backed by the full faith and credit of the
9
United States, which funds have the highest rating available from each Rating
Agency (or, if not rated by all Rating Agencies, rated by at least one Rating
Agency and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds or mutual funds; and
(i) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (i) Lender and (ii) each Rating Agency, as
evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments, (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (C) such
obligation or security has a remaining term to maturity in excess of one (1)
year.
"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 Security Instrument.
"Policies" shall have the meaning set forth in Section 7.1(b) hereof.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 6.2 hereof.
"Property" shall mean the parcel of real property, the Improvements thereon and
all Personal Property owned by Borrower and encumbered by the Security
Instrument, together with all rights pertaining to such property and
Improvements, as more particularly described in the granting clause of the
Security Instrument and referred to therein as the "PROPERTY".
"PROPERTY CONDITION REPORT" shall mean a report prepared by a company
satisfactory to Lender and certified to Lender regarding the physical condition
of the Property, satisfactory in form and substance to Lender in its sole
discretion.
"PROVIDED INFORMATION" shall have the meaning set forth in Section 12.4 hereof.
"RATING AGENCIES" shall mean each of S&P, Moody's and Fitch, and any other
nationally-recognized statistical rating agency which has been approved by
Lender and has rated the Securities.
"RATINGS CONFIRMATION" shall mean a written confirmation from each Rating Agency
rating any Securities that the subject event will not result in a downgrade,
withdrawal, or
10
qualification of any of the ratings then assigned to any of the Securities.
"RELEASE" shall mean any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit" (within the
meaning of Section 860D, or applicable successor provisions, of the Internal
Revenue Code) that holds the Note or any part thereof.
"RENT ROLL" shall mean a rent roll signed and dated by Borrower detailing the
names of all Tenants of the Improvements (including schedules for all executed
Leases for Tenants not yet in occupancy or under which the rent commencement
date has not occurred), the portion of Improvements (in terms of square footage)
occupied by each Tenant, the base rent, additional rent and any other charges
payable under each Lease (including annual store sales required to be reported
by Tenant under any Lease), and the term of each Lease, including the
commencement and expiration dates and any tenant extension, expansion or renewal
options, the extent to which any Tenant is in default under any Lease, and any
other information as is reasonably required by Lender.
"RENTS" shall have the meaning set forth in the Security Instrument.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in Section 8.2(b)
hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in Section 8.2(b)
hereof.
"REPLACEMENT RESERVE INITIAL DEPOSIT" shall have the meaning set forth in
Section 8.2 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth in
Section 8.2(b) hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 8.2(a) hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in Section 8.1(b)
hereof.
"REQUIRED REPAIR FUNDS" shall have the meaning set forth in Section 8.1(b)
hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 8.1 (a) hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 8.4(a) hereof.
"RESERVE ACCOUNTS" shall mean the Tax and Insurance Reserve Account, the
Replacement Reserve Account, the Required Repair Account, the Initial Debt
Service Reserve Account, the Woonsocket Bowling Reserve Account or any other
escrow account established by the Loan Documents.
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"RESERVE FUNDS" shall mean the Tax and Insurance Reserve Funds, the Replacement
Reserve Funds, the Required Repair Funds, the Initial Debt Service Reserve
Funds, the Woonsocket Bowling Reserve Funds, or any other escrow funds
established by the Loan Documents.
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property 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.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section 7.4(b)(iii)
hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section 7.4(b)(iv)
hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 6.1 hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 6.1 hereof.
"SCHEDULED PAYMENT DATE" shall mean the first day of each calendar month during
the term of the Loan.
"SECURITIES" shall have the meaning set forth in Section 12.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIZATION" shall have the meaning set forth in Section 12.1 hereof.
"SECURITY INSTRUMENT" shall mean that certain first priority mortgage/deed of
trust/deed to secure debt, assignment of leases and rents and security
agreement, dated the date hereof, executed and delivered by Borrower 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.
"SERVICING FEES" shall have the meaning set forth in Section 8.12 hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 5.1(c) hereof.
"SPE COMPONENT ENTITY" shall have the meaning set forth in Section 5.1(b)
hereof.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.6(b)(iii)
hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SYNDICATION" shall have the meaning set forth in Section 12.1 hereof.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth in Section
8.6 hereof.
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"TAX AND INSURANCE RESERVE ACCOUNT" shall have the meaning set forth in Section
8.6 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
"TENANT" shall mean any Person leasing, subleasing or otherwise occupying any
portion of the Property under a Lease or other occupancy agreement with
Borrower.
"TERMINATION FEE DEPOSIT" shall have the meaning set forth in Section 8.3.
"TITLE INSURANCE POLICY" shall mean that certain ALTA (or its equivalent)
mortgagee title insurance policy issued with respect to the Property and
insuring the lien of the Security Instrument.
"TRANSFEREE" shall have the meaning set forth in Section 6.5 hereof
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect in the State where the applicable Property is located.
"UTILITY EASEMENT" shall have the meaning set forth in Section 4.23 hereof.
"U.S. BANKRUPTCY CODE" shall mean Title 11 U.S.C. Section 101 et seq., and the
regulations adopted and promulgated pursuant thereto (as the same may be amended
from time to time).
"WOONSOCKET BOWLING" shall mean Woonsocket Bowling Center, LLC.
"WOONSOCKET BOWLING LEASE" shall mean that certain Amended and Restated Lease
dated as of June 3, 2006 between Borrower, as landlord, and Woonsocket Bowling,
as tenant, and any amendments, modifications or changes thereto.
"WOONSOCKET BOWLING RESERVE ACCOUNT" shall have the meaning set forth in Section
8.10 hereof.
"WOONSOCKET BOWLING RESERVE FUNDS" shall have the meaning set forth in Section
8.10 hereof
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
13
equally applicable to both the singular and plural forms of the terms so
defined.
ARTICLE 2 - GENERAL TERMS
Section 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER
(a) 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.
(b) Borrower may request and receive only one borrowing in respect of the Loan
and any amount borrowed and repaid in respect of the Loan may not be reborrowed.
(c) The Loan shall be evidenced by the Note and secured by the Security
Instrument and the other Loan Documents (other than the Environmental
Indemnity).
(d) Borrower shall use the proceeds of the Loan to (i) repay and discharge any
existing loans relating to the Property, (ii) pay certain costs in connection
with the financing of the Property, (iii) make deposits into the Reserve Funds
on the Closing Date in the amounts provided herein, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, as approved by Lender, (v)
fund any working capital requirements of the Property, and (vi) distribute the
balance, if any, to its partners, members or shareholders, as the case may be.
Section 2.2 INTEREST RATE
(a) Interest Rate. Interest on the outstanding principal balance of the Loan
shall accrue at the Interest Rate or as otherwise set forth in this Agreement
from (and including) the Closing Date to, but excluding, the Maturity Date.
(b) 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.
Borrower understands and acknowledges that such interest accrual requirement
results in more interest accruing on the Loan than if either a thirty (30) day
month and a three hundred sixty (360) day year or the actual number of days and
a three hundred sixty-five (365) day year were used to compute the accrual of
interest on the Loan. Borrower recognizes that such interest accrual requirement
will not fully amortize the Loan within the amortization period set forth in the
application for the Loan.
Section 2.3 LOAN PAYMENTS
(a) Monthly Payments. Borrower shall pay to Lender monthly debt service payments
as follows:
(i) 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 the last
day of the calendar month in which the Closing Date occurs; and
14
(ii) on November 1, 2006 and on each Scheduled Payment Date thereafter up to and
including October 1, 2011, Borrower shall make a payment to Lender of interest
only (the "INTEREST ONLY MONTHLY PAYMENT AMOUNT") on the outstanding principal
balance of the Loan; and
(iii) on November 1, 2011 and on each Scheduled Payment Date thereafter up to
and including September 1, 2016, Borrower shall make a payment to Lender of
principal and interest in an amount equal to $141,847.62 (the "PRINCIPAL AND
INTEREST MONTHLY PAYMENT AMOUNT"; and together with the Interest Only Monthly
Payment Amount, the "MONTHLY PAYMENT AMOUNT"), which payments shall be applied
first to accrued and unpaid interest and the balance to principal.
(b) 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 Security Instrument
and the other Loan Documents.
(c) Interest Period. The first interest accrual period hereunder shall commence
on and include the Closing Date and shall end on and include the last day of the
calendar month in which the Closing Date occurs. Each interest accrual period
thereafter shall commence on the first day of each calendar month during the
term of this Agreement and shall end on and include the last day of such
calendar month.
(d) Payments Generally. 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.
(e) Defenses. All amounts due under this Agreement and the other Loan Documents
shall be payable without setoff, counterclaim, defense or any other deduction
whatsoever.
(f) 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 1:00 P.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.
(g) Application of Payments. Prior to the occurrence of an Event of Default, all
monthly payments made as scheduled under this Agreement and the Note shall be
applied first to the payment of interest computed at the Interest Rate, and the
balance toward the reduction of the principal amount of the Note. All voluntary
and involuntary prepayments on the Note shall be applied, to the extent thereof,
to accrued but unpaid interest on the amount prepaid, to the remaining principal
amount, and any other sums due and unpaid to Lender in connection with the Loan,
in such manner and order as Lender may elect in its sole and absolute
discretion, including, but not limited to, application to principal installments
in inverse order of maturity.
15
Following the occurrence and during the continuance of an Event of Default, any
payment made on the Note shall be applied to accrued but unpaid interest, late
charges, accrued fees, the unpaid principal amount of the Note, and any other
sums due and unpaid to Lender in connection with the Loan, in such manner and
order as Lender may elect in its sole and absolute discretion.
Section 2.4 LATE PAYMENT CHARGE
if any principal, interest or any other sums due under the Loan Documents
(excluding the amounts due on the Maturity Date) are not paid by Borrower prior
to the fifth day following 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 Security Instrument and the other Loan Documents to the extent
permitted by applicable law.
Section 2.5 RESERVED
Section 2.6 PREPAYMENT:DEFEASANCE
Except as otherwise expressly permitted by this Section 2.6, no voluntary
prepayments, whether in whole or in part, of the Loan or any other amount at any
time due and owing under the Note can be made by Borrower or any other Person
without the express written consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender shall have no
obligation to accept, any voluntary prepayment, whether in whole or in part, of
the Loan during the Lockout Period. Notwithstanding the foregoing, if either (i)
Lender, in its sole and absolute discretion, accepts a full or partial voluntary
prepayment during the Lockout Period or (ii) there is an involuntary prepayment
during the Lockout Period, then, in either case, Borrower shall, in addition to
any portion of the Loan prepaid (together with all interest accrued and unpaid
thereon), pay to Lender a prepayment premium in an amount calculated in
accordance with Section 2.6(c) hereof.
(b) Defeasance.
(i) Notwithstanding any provisions of this Section 2.6 to the contrary,
including, without limitation, subsection (a) of this Section 2.6, at any time
after the Permitted Defeasance Date, Borrower may cause the release of the
Property from the lien of the Security Instrument and the other. Loan Documents
upon the satisfaction of the following conditions (such event being a
"DEFEASANCE EVENT"):
(A) no Event of Default shall exist under any of the Loan Documents;
(B) not less than thirty (30) (but not more than sixty (60)) days prior written
notice shall be given to Lender specifying a date on which the Defeasance
Collateral (as hereinafter defined) is to be delivered (the "RELEASE DATE");
provided, however, that Borrower shall have the right (i) to cancel such notice
by
16
providing Lender with notice of cancellation ten (10) days prior to the
scheduled Release Date, or (ii) to extend the scheduled Release Date until the
next Scheduled Payment Date; provided that in each case, Borrower shall pay all
of Lender's costs and expenses incurred as a result of such cancellation or
extension;
(C) all accrued and unpaid interest and all other sums due under the Note, this
Agreement and under the other Loan Documents up to the Release Date, including,
without limitation, all fees, costs and expenses incurred by Lender and its
agents in connection with such release (including, without limitation, legal
fees and expenses for the review and preparation of the Defeasance Security
Agreement (as hereinafter defined) and of the other materials described in
Section 2.6(b)(i)(D) below and any related documentation, and any servicing
fees, Rating Agency fees or other costs related to such release), shall be paid
in full on or prior to the Release Date;
(D) Borrower shall deliver to Lender on or prior to the Release Date:
(1) a pledge and security agreement, in form and substance satisfactory to a
prudent lender and satisfying any requirements binding upon any applicable REMIC
Trust, creating a first priority security interest in favor of Lender in the
Defeasance Collateral, as defined herein (the "DEFEASANCE SECURITY AGREEMENT"),
which shall provide, among other things, that any excess amounts received by
Lender from the Defeasance Collateral over the amounts payable by Borrower on a
given Scheduled Payment Date, which excess amounts are not required to cover all
or any portion of amounts payable on a future Scheduled Payment Date, shall be
refunded to Borrower promptly after each such Scheduled Payment Date;
(2) direct non-callable obligations of the United States of America or other
obligations which are "government securities" within the meaning of Section
2(a)(16) of the Investment Company Act of 1940, to the extent the applicable
Rating Agencies rating the Securities have confirmed in writing will not cause a
downgrade, withdrawal or qualification of the initial, or, if higher, then
applicable ratings of the Securities, that provide for payments prior and as
close as possible to (but in no event later than) all successive Scheduled
Payment Dates occurring after the Release Date, with each such payment being
equal to or greater than the amount of the corresponding Monthly Payment Amount
required to be paid under this Agreement and the Note (including all amounts due
on the Maturity Date) for the balance of the term hereof (the "DEFEASANCE
COLLATERAL"), each of which shall be duly endorsed by the holder thereof as
directed by Lender or accompanied by a written instrument of transfer in form
and substance wholly satisfactory to Lender in its sole discretion (including,
without limitation, such certificates, documents and instruments as may be
required by the depository institution holding such securities or 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 Security Agreement the first priority security
interest therein in
17
favor of Lender in conformity with all applicable state and federal laws
governing granting of such security interests;
(3) a certificate of Borrower certifying that all of the requirements set forth
in this Section 2.6(b)(i) have been satisfied;
(4) one or more opinions of counsel for Borrower in form and substance and
delivered by counsel which would be satisfactory to a prudent lender and
satisfying any requirements binding upon any applicable REMIC Trust stating,
among other things, that (i) Lender has a perfected first priority security
interest in the Defeasance Collateral and that the Defeasance Security Agreement
is enforceable against Borrower in accordance with its terms, (ii) in the event
of a bankruptcy proceeding or similar occurrence with respect to Borrower, none
of the Defeasance Collateral nor any proceeds thereof will be property of
Borrower's estate under Section 541 of the U.S. Bankruptcy Code or any similar
statute and the grant of security interest therein to Lender shall not
constitute an avoidable preference under Section 547 of the U.S. Bankruptcy Code
or applicable state law, (iii) the release of the lien of the Security
Instrument and the pledge of Defeasance Collateral will not directly or
indirectly result in or cause any REMIC Trust that then holds the Note to fail
to maintain its status as a REMIC Trust and (iv) the defeasance will not cause
any REMIC Trust to be an "investment company" under the Investment Company Act
of 1940;
(5) a certificate in form and scope acceptable to Lender in its sole discretion
from an Acceptable Accountant certifying that the Defeasance Collateral will
generate amounts sufficient to make all payments of principal and interest due
under the Note (including the scheduled outstanding principal balance of the
Loan due on the Maturity Date); and
(6) such other certificates, documents and instruments as Lender may in its sole
discretion require; and
(E) in the event the Loan or any part thereof is held by a REMIC Trust, Lender
has received a Ratings Confirmation in connection with the substitution of the
Defeasance Collateral.
(ii) Upon compliance with the requirements of Section 2.6(b)(i), the Property
shall be released from the lien of the Security Instrument and the other Loan
Documents, and the Defeasance Collateral shall constitute collateral which shall
secure the Note and all other obligations under the Loan Documents. Lender will,
at Borrower's expense, execute and deliver any agreements reasonably requested
by Borrower to release the lien of the Security Instrument and the other Loan
Documents from the Property.
(iii) Upon the release of the Property in accordance with this Section 2.6(b),
Borrower shall (at Lender's sole and absolute discretion) assign all its
obligations and rights under the Note, together with the pledged Defeasance
Collateral, to a successor entity designated and approved by Lender in its sole
and absolute discretion ("SUCCESSOR
18
BORROWER"). Successor Borrower shall execute an assignment and assumption
agreement in form and substance satisfactory to Lender in its sole and absolute
discretion pursuant to which it shall assume Borrower's obligations under the
Note and the Defeasance Security Agreement. As conditions to such assignment and
assumption, Borrower shall (A) deliver to Lender one or more opinions of counsel
in form and substance and delivered by counsel which would be satisfactory to a
prudent Lender stating, among other things, that such assignment and assumption
agreement is enforceable against Borrower and the Successor Borrower in
accordance with its terms and that the Note, the Defeasance Security Agreement
and the other Loan Documents, as so assigned and assumed, are enforceable
against the Successor Borrower in accordance with their respective terms, and
opining to such other matters relating to Successor Borrower and its
organizational structure as Lender may require, and (B) pay all fees, costs and
expenses incurred by Lender or its agents in connection with such assignment and
assumption (including, without limitation, legal fees and expenses and for the
review of the proposed transferee and the preparation of the assignment and
assumption agreement and related certificates, documents and instruments and any
fees payable to any Rating Agencies and their counsel in connection with the
issuance of the Ratings Confirmation referred to in subsection 2.6(b)(i)(E)
above). Upon such assignment and assumption, Borrower shall be relieved of its
obligations hereunder, under the Note, under the other Loan Documents and under
the Defeasance Security Agreement, except as expressly set forth in the
assignment and assumption agreement.
(c) Involuntary Prepayment During the Lockout Period. If, prior to the
expiration of the Lockout Period and if an Event of Default has occurred and is
continuing, Borrower tenders payment of all or any part of the Debt, or if all
or any portion of the Debt is recovered by Lender after such Event of Default,
such tender or recovery shall be deemed a prepayment by Borrower in violation of
the prohibition against prepayment set forth in Section 2.6(a) hereof, and
Borrower shall pay, in addition to the Debt, (i) an amount equal to the greater
of (a) 1% of the outstanding principal amount of the Loan and (b) the positive
difference, if any, between (x) the present value on the date of such
acceleration of all future installments which Borrower would otherwise be
required to pay under the Note during the original term hereof absent such
acceleration, including the outstanding principal amount of the Loan which might
otherwise be due upon the scheduled Maturity Date absent such acceleration, with
such present value being determined by the use of a discount rate equal to the
yield to maturity (adjusted to a "Mortgage Equivalent Basis" pursuant to the
standards and practices of the Securities Industry Association), on the date of
such acceleration, of the United States Treasury Security having the term to
maturity closest to what otherwise would have been the remaining term hereof
absent such acceleration, and (y) the outstanding principal amount of the Loan
on the date of such acceleration.
(d) Insurance and Condemnation Proceeds; Changes in Taxes; Excess Interest.
Notwithstanding any other provision herein to the contrary, Borrower shall not
be required to pay any prepayment premium in connection with any prepayment
occurring solely as a result of (i) the application of Insurance Proceeds or
Condemnation Proceeds pursuant to the terms of the Loan Documents, provided
that, at the time of the related Casualty or Condemnation no Event of Default
was continuing, (ii) any prepayment of the Debt following Lender's declaring the
Debt
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immediately due and payable pursuant to Section 16.4 hereof, or (ii) the
application of any interest in excess of the Maximum Legal Rate to the reduction
of the Loan.
(e) After the Lockout Period. Commencing on the day after the expiration of the
Lockout Period, and upon giving Lender at least thirty (30) days (but not more
than sixty (60) days) prior written notice, Borrower may voluntarily prepay
(without premium) the Note in whole (but not in part) on a Scheduled Payment
Date. Lender shall accept a prepayment pursuant to this Section 2.6(e) on a day
other than a Scheduled Payment Date provided that, in addition to payment of the
full outstanding principal balance of the Note, Borrower pays to Lender a sum
equal to the amount of interest which would have accrued on the Note if such
prepayment occurred on the next Scheduled Payment Date.
Section 2.7 PAYMENTS AFTER DEFAULT
Upon the occurrence and during the continuance of an Event of Default, interest
on the outstanding principal balance of the Loan and, to the extent permitted by
law, overdue interest and other amounts due in respect of the Loan, (a) shall
accrue at the Default Rate, and (b) Lender shall be entitled to receive and
Borrower shall pay to Lender all cash flow from the Property, such amount to be
applied by Lender to the payment of the Debt in such order as Lender shall
determine in its sole discretion, including, without limitation, alternating
applications thereof between interest and principal. Interest at the Default
Rate shall be computed from the date such payment was due or other obligation
was to be performed without regard to any grace or cure periods until the
earlier of (i) the actual receipt and collection of the Debt (or that portion
thereof that is then due) and (ii) the cure of such Event of Default. To the
extent permitted by applicable law, interest at the Default Rate shall be added
to the Debt, shall itself accrue interest at the same rate as the Loan and shall
be secured by the Security Instrument. This paragraph shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default; the acceptance of any payment from Borrower
shall not be deemed to cure or constitute a waiver of any Event of Default; and
Lender retains its rights under this Agreement to accelerate and to continue to
demand payment of the Debt upon the happening of and during the continuance any
Event of Default, despite any payment by Borrower to Lender.
Section 2.8 _____ SAVINGS
This Agreement and the Note 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
20
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.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as of the Closing Date that:
Section 3.1 ORGANIZATION
Borrower (a) has been duly organized and is validly existing and in good
standing with requisite power and authority to own the Property and to transact
the businesses in which it is now engaged, (b) is duly qualified to do business
and is in good standing in each jurisdiction in which the Property is located
and each other jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations, (c) 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, and (d) has full power, authority and
legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey the Property pursuant to the terms of the Loan Documents, and has
full power, authority and legal right to keep and observe all of the terms of
the Loan Documents to which it is a party. Borrower represents and warrant that
the chart attached hereto as Exhibit A sets forth an accurate listing of the
direct and indirect owners of the equity interests in Borrower.
Section 3.2 STATUS OF BORROWER
Borrower's exact legal name is correctly set forth on the first page of this
Agreement. Borrower is an organization of the type specified on the first page
of this Agreement. Borrower is incorporated in or organized under the laws of
the state of Delaware. 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 of
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) the address of Borrower set forth on the first page of
this Agreement. Borrower's organizational identification number, if any,
assigned by the state of incorporation or organization is 2239375. Borrower's
United States taxpayer identification number is 13-3582577.
Section 3.3 VALIDITY OF DOCUMENTS
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 the 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).
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Section 3.4 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 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 Governmental Authority
required for the execution, delivery and performance by Borrower of this
Agreement or any of the other Loan Documents has been obtained and is in full
force and effect.
Section 3.5 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, to the best of Borrower's
knowledge, threatened against or affecting Borrower, Guarantor, Manager or the
Property, which actions, suits or proceedings, if determined against Borrower,
Guarantor or the Property, would materially adversely affect the condition
(financial or otherwise) or business of Borrower or Guarantor or the condition
or ownership of the Property.
Section 3.6 AGREEMENTS
Borrower is not a party to any agreement or instrument or subject to any
restriction which would 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 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 and (b)
obligations under the Loan Documents.
Section 3.7 SOLVENCY
Borrower has (a) not entered into the transaction evidenced by this Agreement 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 the assets of Borrower
exceeds and will, immediately following the making of the Loan, exceed the total
liabilities of Borrower, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. No petition in bankruptcy has
been filed against Borrower, Guarantor, any SPE Component Entity or Affiliated
Manager in the last seven (7) years, and neither Borrower nor Guarantor, any SPE
Component Entity or Affiliated Manager in the last seven (7)
22
years has taken advantage of any Creditors Rights Laws. Neither Borrower nor
Guarantor, any SPE Component Entity or Affiliated Manager is contemplating
either the filing of a petition by it under any Creditors Rights 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 Borrower or Guarantor, any SPE Component Entity or Affiliated
Manager.
Section 3.8 FULL AND ACCURATE DISCLOSURE
No statement of fact made by or on behalf of Borrower in this Agreement or in
any of the other Loan Documents or in any other material, information, financial
data, document or certificate delivered by or on behalf of Borrower contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can reasonably foresee,
might adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.
Section 3.9 NO PLAN ASSETS
Borrower is not an "employee benefit plan," as defined in Section 3(3) of ERISA,
subject to Title I of ERISA, 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 state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
Section 3.10 NOT A FOREIGN PERSON
Neither Borrower nor Guarantor is a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code.
Section 3.11 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, and
neither Borrower nor Guarantor has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
Section 3.12 BUSINESS PURPOSES
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
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Section 3.13 COMPLIANCE
Borrower and the Property, and the use and operation thereof, comply in all
material respects with all Legal Requirements, including, without limitation,
building and zoning ordinances and codes. To Borrower's knowledge, Borrower is
not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority and Borrower has received no written notice of any
such default or violation. There has not been committed by Borrower or, to
Borrower's knowledge, any other Person in occupancy of or involved with the
operation or use of the Property any act or omission affording any 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.
Section 3.14 FINANCIAL INFORMATION
All financial data, including, without limitation, the balance sheets,
statements of cash flow, statements of income and operating expense and rent
rolls, that have been delivered to Lender in respect of Borrower, Guarantor
and/or the Property (a) are true, complete and correct in all material respects,
(b) accurately represent the financial condition of Borrower, Guarantor or the
Property, as applicable, as of the date of such reports, and (c) 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. 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 material adverse effect on the Property or the
current and/or intended operation thereof, 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 or Guarantor from that set forth in said financial
statements.
Section 3.15 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
Security Instrument, 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 personality (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.
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Section 3.16 Condemnation
No Condemnation or other 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.
Section 3.17 UTILITIES AND PUBLIC ACCESS; PARKING
The Property has adequate 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 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. The Property has, or is served by, parking to the extent required
to comply with all Legal Requirements.
Section 3.18 SEPARATE LOTS
The Property is assessed for real estate tax purposes as one or more wholly
independent tax lot or lots, separate from any adjoining land or improvements
not constituting a part of such lot or lots, and no other land or improvements
is assessed and taxed together with the Property or any portion thereof.
Section 3.19 ASSESSMENTS
To Borrower's knowledge, 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.
Section 3.20 INSURANCE
Borrower has obtained and has delivered to Lender certified copies of all
Policies or, to the extent such Policies are not available as of the Closing
Date, certificates of insurance with respect to all such Policies reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement.
No claims have been made under any of the Policies, and to Borrower's knowledge,
no Person, including Borrower, has done, by act or omission, anything which
would impair the coverage of any of the Policies.
Section 3.21 USE OF PROPERTY
The Property is used exclusively for retail purposes and other appurtenant and
related uses.
Section 3.22 CERTIFICATE OF OCCUPANCY; LICENSES
All certifications, permits, licenses and approvals, including, without
limitation,
25
certificates of completion or occupancy and any applicable liquor license
required for the legal use, occupancy and operation of the Property for the
purpose intended herein, have been obtained and are valid and in full force and
effect. Borrower shall keep and maintain all licenses necessary for the
operation of the Property for the purpose intended herein. The use being made of
the Property is in conformity with the certificate of occupancy issued for the
Property.
Section 3.23 FLOOD ZONE
None of the Improvements on the Property are located in an area identified by
the Federal Emergency Management Agency as an area having special flood hazards,
or, if any portion of the Improvements is located within such area, Borrower has
obtained the insurance prescribed in Section 7.1(a)(i) hereof.
Section 3.24 PHYSICAL CONDITION
Except as set forth in the Property Condition Report, (a) 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; and (b) there exists
no structural or other material defects or damages in the Property, as a result
of a Casualty or otherwise, and whether latent or otherwise. 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.
Section 3.25 BOUNDARIES
None of the Improvements which were included in determining the appraised value
of the Property lie outside the boundaries and building restriction lines of the
Property to any material extent, and (b) 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 materially affect the
value or marketability of the Property.
Section 3.26 LEASES AND RENT ROLL
Borrower has delivered to Lender a true, correct and complete Rent Roll for the
Property which includes all Leases affecting the Property Except as expressly
set forth in the Rent Roll and tenant estoppel certificates delivered to Lender
on or prior to the Closing Date: (a) each Lease is in full force and effect; (b)
the premises demised under the Leases have been completed and the Tenants under
the Leases have accepted possession of and are in occupancy of all of their
respective demised premises; (c) the Tenants under the Leases have commenced the
payment of rent under the Leases, there are no offsets, claims or defenses to
the enforcement thereof, and Borrower has no monetary obligations to any Tenant
under any Lease; (d) all Rents due and payable under the Leases have been paid
and no portion thereof has been paid for any period more than thirty (30) days
in advance; (e) the rent payable under each Lease is the amount of fixed rent
set forth in the Rent Roll, and there is no claim or basis for a claim by the
Tenant
26
thereunder for an offset or adjustment to the rent; (f) no Tenant has made any
written claim of a material default against the landlord under any Lease which
remains outstanding nor has Borrower or Manager received, by telephonic,
in-person, e-mail or other communication, any notice of a material default under
any Lease; (g) to Borrower's knowledge there is no present material default by
the Tenant under any Lease; (h) all security deposits under the Leases have been
collected by Borrower and are held in the amount stated in the related Lease;
(i) Borrower is the sole owner of the entire landlord's interest in each Lease;
(j) each Lease is the valid, binding and enforceable obligation of Borrower and
the applicable Tenant thereunder and there are no agreements with the Tenants
under the Leases other than as expressly set forth in the Leases; (k) no Person
has any possessory interest in, or right to occupy, the Property or any portion
thereof except under the terms of a Lease; (1) none of the Leases contains any
option or offer to purchase or right of first refusal to purchase the Property
or any part thereof; (m) neither the Leases nor the Rents have been assigned or
pledged except to Lender, and no other Person has any interest therein; (n) no
conditions exist which now give any Tenant or party the right to "go dark"
pursuant to the provisions of its Lease or any reciprocal easement agreement and
(o) none of the Leases conflict in any manner with the terms of any reciprocal
easement agreements or other agreements to which the Property is bound.
Section 3.27 FILING AND RECORDING TAXES
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 Security Instrument, have been paid.
Section 3.28 INTENTIONALLY OMITTED
Section 3.29 ILLEGAL ACTIVITY
No portion of the Property has been or will be purchased, improved, equipped or
fixtured with proceeds of any illegal activity, and no part of the proceeds of
the Loan will be used in connection with any illegal activity.
Section 3.30 CONSTRUCTION EXPENSES
All costs and expenses of any and all labor, materials, supplies and equipment
used in the construction, maintenance or repair of the Improvements have been
paid in full. To Borrower's knowledge after due inquiry, 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.
Section 3.31 PERSONAL PROPERTY
Borrower has paid in full for, and is the owner of, all Personal Property (other
than tenants' property) used in connection with the operation of the Property,
free and clear of any and all security interests, liens or encumbrances, except
for Permitted Encumbrances and the Lien and security interest created by the
Loan Documents.
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Section 3.32 TAXES
Borrower and Guarantor have filed all federal, state, county, municipal, and
city income, personal property and other tax returns required to have been filed
by them and have paid all taxes and related liabilities. Neither Borrower nor
Guarantor knows of any basis for any additional assessment in respect of any
such taxes and related liabilities for prior years.
Section 3.33 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 prohibited by
the terms and conditions of this Agreement or the other Loan Documents.
Section 3.34 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.
Section 3.35 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE
All information submitted by Borrower or its agents to Lender and in all
financial statements, rent rolls, 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 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 representation or warranty made herein to be
materially misleading.
Section 3.36 INTELLECTUAL PROPERTY
All trademarks, trade names and service marks necessary to the business of
Borrower as presently conducted or as Borrower contemplates conducting its
business are in good standing and, to the extent of Borrower's actual knowledge,
uncontested. Borrower has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted trademarks, trade names and
service marks of others. To Borrower's knowledge, there is no infringement by
others of trademarks, trade names and service marks of Borrower.
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Section 3.37 COMPLIANCE WITH ANTI-TERRORISM LAWS
None of Borrower, Guarantor or any Person who owns a direct or indirect equity
interest in Borrower or Guarantor currently is identified by the Office of
Foreign Assets Control, Department of the Treasury ("OFAC") or otherwise
qualifies as a Embargoed Person, and Borrower has implemented procedures to
ensure that no Person who now or hereafter owns a direct or indirect equity
interest in Borrower or Guarantor is an Embargoed Person or is Controlled by an
Embargoed Person. None of Borrower, Guarantor or any Person who owns a direct or
indirect equity interest in Borrower or Guarantor is in violation of any
applicable law relating to anti-money laundering or anti-terrorism, including,
without limitation, those related to transacting business with Embargoed Persons
or the requirements of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S.
Public Law 107-56, and the related regulations issued thereunder, including
temporary regulations (collectively, as the same may be amended from time to
time, the "PATRIOT ACT"). To the best of Borrower's knowledge, no Tenant at the
Property is currently identified by OFAC or otherwise qualifies as an Embargoed
Person, or is owned or Controlled by an Embargoed Person. Borrower has
determined that Manager has implemented procedures approved by Borrower to
ensure that no Tenant at the Property is currently identified by OFAC or
otherwise qualifies as an Embargoed Person, or is owned or Controlled by an
Embargoed Person.
Section 3.38 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.
Section 3.39 SURVIVAL
Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Article 3 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to Lender. 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.
ARTICLE 4 - BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and performance in
full of all obligations of Borrower under the Loan Documents or the earlier
release of the Lien of the Security Instrument (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:
Section 4.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) 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. Borrower hereby covenants and
29
agrees not to commit, permit or suffer to exist any act or omission affording
any 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. Borrower shall at all times maintain, preserve
and protect all franchises and trade names used in connection with the operation
of the Property.
(b) 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, any Legal Requirement affecting the Property,
provided that (i) no Default or Event of Default has occurred and is continuing;
(ii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Borrower or the Property is
subject and shall not constitute a default thereunder; (iii) neither the
Property, any part thereof or interest therein, any of the Tenants or occupants
thereof, nor Borrower shall be affected in any material adverse way as a result
of such proceeding; (iv) non-compliance with the Legal Requirement shall not
impose civil or criminal liability on Borrower or Lender; (v) Borrower shall
have furnished the security as may be required in the proceeding or by Lender to
ensure compliance by Borrower with the Legal Requirement; and (vi) Borrower
shall have furnished to Lender all other items reasonably requested by Lender.
Borrower shall cause the Property to be maintained in a good and safe condition
and repair. The Improvements and the Personal Property shall not be removed,
demolished or, other than in accordance with the provisions of Section 4.21,
materially altered (except for normal replacement of the Personal Property),
without the prior written consent of Lender. If under applicable zoning
provisions the use of all or any portion of the Property is or shall become a
nonconforming use, Borrower will not cause or permit the nonconforming use to be
discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender.
Section 4.2
MAINTENANCE AND USE OF PROPERTY
Section 4.3 WASTE
Borrower shall not commit or suffer any waste of the Property or make any change
in the use of the Property which will in any way materially increase the risk of
fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or give cause for cancellation of any Policy, or do
or permit to be done thereon anything that may in any way impair the value of
the Property or the security for the Loan. Borrower will not, without the prior
written consent of Lender, permit any drilling or exploration for or extraction,
removal, or production of any minerals from the surface or the subsurface of the
Property, regardless of the depth thereof or the method of mining or extraction
thereof.
Section 4.4 TAXES AND OTHER CHARGES
(a) 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 8.6 hereof. Borrower
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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,
that 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 8.6
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.
(b) 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 is continuing; (ii) 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 Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) 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; (v) such
proceeding shall suspend the collection of such contested Taxes or Other Charges
from the Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or deliver to Lender such reserve deposits as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon (unless Borrower has paid all
of the Taxes or Other Charges under protest). 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, canceled or lost or there shall be
any danger of the Lien of the Security Instrument being primed by any related
Lien.
Section 4.5 LITIGATION
Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against Borrower which
might materially adversely affect Borrower's condition (financial or otherwise)
or business or the Property.
Section 4.6 ACCESS TO PROPERTY
Subject to the rights of Tenants under Leases, Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice.
Section 4.7 NOTICE OF DEFAULT
Borrower shall promptly advise Lender of any material adverse change in the
condition (financial or otherwise) of Borrower, any Guarantor or the Property or
of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
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Section 4.8 COOPERATE IN LEGAL PROCEEDINGS
Borrower shall at Borrower's expense 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.
Section 4.9 PERFORMANCE BY BORROWER
Borrower shall in a timely manner observe, perform and fulfill each and every
covenant, term and provision to be observed and performed by Borrower under this
Agreement and the other Loan Documents and any other agreement or instrument
affecting or pertaining to the Property and any amendments, modifications or
changes thereto. Borrower agrees not to enter into, terminate or modify any
reciprocal easement agreement affecting the Property without Lender's prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed.
Section 4.10 AWARDS; INSURANCE PROCEEDS
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 reasonable, actual attorneys' fees and
disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereof) out of such Awards or Insurance Proceeds.
Section 4.11 FINANCIAL REPORTING.
(a) Borrower shall keep adequate books and records of account in accordance with
GAAP, or in accordance with other methods acceptable to Lender in its sole
discretion, consistently applied and shall furnish to Lender:
(i) quarterly and annual (and prior to a Securitization, if requested by Lender,
monthly) certified Rent Rolls signed and dated by Borrower, within twenty (20)
days after the end of each calendar month, thirty (30) days after the end of
each fiscal quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;
(ii) quarterly and annual (and prior to a Securitization, if requested by
Lender, monthly) operating statements of the Property, prepared and certified by
Borrower in the form required by Lender (or if requested by Lender after an
Event of Default, an audited annual operating statement prepared by an
independent certified public accounting firm acceptable to Lender), detailing
the revenues received, the expenses incurred and the net operating income before
and after debt service (principal and interest) and major capital improvements
for the period of calculation and containing appropriate year-to-date
information, within twenty (20) days after the end of each calendar month,
thirty (30) days after the end of each fiscal quarter or sixty (60) days after
the close of each fiscal year of Borrower, as applicable;
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(iii) annual balance sheets, profit and loss statements, and statements of cash
flows of Borrower in the form required by Lender, prepared and certified by
Borrower (or if requested by Lender after an Event of Default, annual audited
financial statements prepared by an independent certified public accounting firm
acceptable to Lender), within ninety (90) days after the close of each fiscal
year of Borrower; and
(iv) in the event Guarantor fails to file an annual AKR form 10K with the SEC
through EDGAR, annual balance sheets, profit and loss statements, and statements
of cash flows of Guarantor in the form required by Lender, prepared and
certified by Guarantor (or if requested by Lender after an Event of Default,
annual audited financial statements prepared by an independent certified public
accounting firm acceptable to Lender), within ninety (90) days after the close
of each fiscal year of Guarantor.
(b) Borrower shall furnish Lender with such other additional financial,
management or other information (including state and federal tax returns) as
may, from time to time, be reasonably required by Lender in form and substance
satisfactory to Lender (including, without limitation, any financial reports
required to be delivered by any Tenant or any guarantor of any Lease pursuant to
the terms of such Lease), and shall furnish to Lender and its agents convenient
facilities for the examination and audit of any such books and records.
(c) All items requiring the certification of Borrower shall, except where
Borrower is an individual, require a certificate executed by the general
partner, managing member or chief executive officer of Borrower, as applicable
(and the same rules shall apply to any sole shareholder, general partner or
managing member which is not an individual).
Section 4.12 ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the rate of
interest on the Note, (iii) the unpaid principal amount 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 Security Instrument 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) Promptly upon notice from Lender, Borrower shall request and thereafter use
its best efforts to promptly deliver to Lender duly executed estoppel
certificates from any one or more Tenants as specified by Lender in form and
substance reasonably satisfactory to Lender.
Section 4.13 LEASING MATTERS
(a) Borrower may enter into a proposed Lease (including the renewal, extension
or modification of an existing Lease) without the prior written consent of
Lender, provided such proposed Lease (i) provides for rental rates and terms
comparable to existing local market rates and terms (taking into account the
type and quality of the Tenant) as of the date such Lease is executed by
Borrower (unless, in the case of a renewal, the rent payable during such
renewal, or a formula or other method to compute such rent, is provided for in
the original Lease), (ii) is an arm's-length transaction with a bona fide,
independent third party Tenant, (iii) does not have a
33
materially adverse effect on the value of the Property taken as a whole, (iv) is
subject and subordinate to the Security Instrument and requires the Tenant
thereunder to attorn to Lender, (v) does not contain any option, offer, right of
first refusal, or other similar right to acquire all or any portion of the
Property, (vi) has no rent, credits, free rents or concessions granted
thereunder other than rent credits, free rents or concessions that are
comparable to existing local market rates and terms (taking into account the
type and quality of the Tenant) and which do not affect the cash flow of the
Property in a material adverse way, (vii) obligates the Tenant to operate its
intended business at the leased premises at all times during the Lease term,
(viii) is written on the standard form of lease approved by Lender and (ix) is
not a Major Lease. All proposed Leases which do not satisfy the requirements set
forth in this subsection shall be subject to the prior approval of Lender and
its counsel, at Borrower's expense. Borrower shall promptly deliver to Lender
copies of all Leases which are entered into pursuant to this subsection together
with Borrower's certification that it has satisfied all of the conditions of
this subsection.
(b) Borrower (i) shall observe and perform all the obligations imposed upon the
landlord under the Leases and shall not do or permit to be done anything to
impair the value of any of the Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all notices of default which Borrower shall
send or receive thereunder; (iii) shall enforce all of the material terms,
covenants and conditions contained in the Leases upon the part of the Tenant
thereunder to be observed or performed; (iv) shall not collect any of the Rents
more than one (1) month in advance (except security deposits shall not be deemed
Rents collected in advance); (v) shall not execute any other assignment of the
landlord's interest in any of the Leases or the Rents; and (vi) shall not
consent to any assignment of or subletting under any Leases not in accordance
with their terms, without the prior written consent of Lender.
(c) Borrower may, without the prior written consent of Lender, amend, modify or
waive the provisions of any Lease or terminate, reduce Rents under, accept a
surrender of space under, permit the Tenant to cease operating its business at
the leased premises, or shorten the term of, any Lease (including any guaranty,
letter of credit or other credit support with respect thereto) provided that
such action (taking into account, in the case of a termination, reduction in
rent, surrender of space, ceasing of operations or shortening of term, the
planned alternative use of the affected space) does not have a materially
adverse effect on the value of the Property taken as a whole, and provided that
such Lease, as amended, modified or waived, is otherwise in compliance with the
requirements of Section 4.13(a) hereof and any subordination agreement binding
upon Lender with respect to such Lease. A termination of a Lease with a Tenant
who is in default beyond applicable notice and grace periods shall not be
considered an action which has a materially adverse effect on the value of the
Property taken as a whole. Any amendment, modification, waiver, termination,
rent reduction, space surrender, ceasing of operations or term shortening which
does not satisfy the requirements set forth in this subsection shall be subject
to the prior approval of Lender (not to be unreasonably withheld or delayed) and
its counsel, at Borrower's expense. Borrower shall promptly deliver to Lender
copies of amendments, modifications and waivers which are entered into pursuant
to this subsection together with Borrower's certification that it has satisfied
all of the conditions of this subsection.
(d) Notwithstanding anything contained herein to the contrary, Borrower shall
not, without the prior written consent of Lender, enter into, renew, extend,
amend, modify, waive any
34
provisions of, terminate, reduce Rents under, accept a surrender of space under,
or shorten the term of any Major Lease.
Section 4.14 PROPERTY MANAGEMENT
(a) Borrower represents and warrants that it self-manages the Property, and no
agent, affiliated or unaffiliated with Borrower, receives a fee or other
compensation for managing the Property. Borrower shall not engage a property
manager without Lender's prior written consent. In the event that Lender
determines that the Property is not being managed in accordance with generally
accepted management practices for properties similar to the Property, Lender
shall deliver written notice thereof to Borrower, which notice shall specify
with particularity the grounds for Lender's determination. If Lender determines
that the conditions specified in Lender's notice are not remedied to Lender's
satisfaction by Borrower within thirty (30) days from receipt of such notice or
that Borrower has failed to diligently undertake correcting such conditions
within such thirty (30) day period, or if an Event of Default has occurred and
is continuing, (i) Borrower shall, at Lender's direction, engage a professional
third party property manager acceptable to Lender and enter into a property
management agreement acceptable to Lender with such management company (the
"MANAGEMENT AGREEMENT"), (ii) Borrower and such third party manager shall
execute an agreement acceptable to Lender conditionally assigning Borrower's
interest in such management agreement to Lender and subordinating manager's
right to receive fees and expenses under such agreement while the Debt remains
outstanding, and (iii) Borrower shall comply with subsections (b)-(e) below.
(b) Borrower shall (i) promptly perform and observe all of the covenants
required to be performed and observed by it under the Management Agreement and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any default under the Management
Agreement of which it is or becomes aware; (iii) promptly deliver to Lender a
copy of any notice of default or other material notice received by Borrower
under the Management Agreement; (iv) promptly give notice to Lender of any
notice or information that Borrower receives which indicates that the Manager is
terminating the Management Agreement or that the Manager is otherwise
discontinuing its management of the Property; and (v) promptly enforce the
performance and observance of all of the covenants required to be performed and
observed by Manager under the Management Agreement.
(c) If at any time, (i) the Manager shall become insolvent or a debtor in a
bankruptcy proceeding; (ii) an Event of Default has occurred and is continuing;
(iii) a default has occurred and is continuing under the Management Agreement;
or (iv) the Debt Service Coverage Ratio for the preceding 3 month period ending
with the most recently completed calendar quarter is less than 1.15 to 1.0,
Borrower shall, at the request of Lender, terminate the Management Agreement and
replace Manager with a manager approved by Lender on terms and conditions
satisfactory to Lender, it being understood and agreed that the management fee
for such replacement manager shall not exceed then prevailing market rates.
(d) Borrower shall not, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
Manager or enter into any other management agreement with respect to the
Property; (ii) reduce or consent to the reduction of the term of the
35
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.
(e) In addition to the foregoing, in the event that Lender reasonably determines
that the Property is not being managed in accordance with generally accepted
management practices for properties of similar type and class that are in the
same vicinity as the Property, Lender shall deliver written notice thereof to
Borrower, which notice shall specify with particularity the grounds for Lender's
determination. If Lender reasonably determines that the conditions specified in
Lender's notice are not remedied to Lender's satisfaction by Borrower within
thirty (30) days from receipt of such notice or that Borrower has failed to
diligently undertake correcting such conditions within such thirty (30) day
period, Borrower shall, at Lender's direction, terminate the Management
Agreement and enter into a new property management agreement acceptable to
Lender with a manager acceptable to Lender.
Section 4.15 LIENS
Borrower shall not, without the prior written consent of Lender, create, incur,
assume or suffer to exist any Lien on any portion of the Property or permit any
such action to be taken, except Permitted Encumbrances.
Section 4.16 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 Tenants and only in accordance with Section 4.13 hereof),
except for adequate consideration and in the ordinary course of Borrower's
business.
Section 4.17 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.
Section 4.18 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 (i) 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"
36
within the meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to
state statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Borrower are publicly offered securities, within the
meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(B) 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. Section 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate operating
company" within the meaning of 29 C.F.R. Section 2510.3-101(c) or (e).
Section 4.19 NO JOINT ASSESSMENT
Borrower shall not suffer, permit or initiate the joint assessment of (a) the
Property with any other real property constituting a tax lot separate from the
Property, or (b) that portion of the Property 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.
Section 4.20 PATRIOT ACT
Neither Borrower nor Guarantor shall (a) be or become subject at any time to any
law, regulation, or list of any government agency (including, without
limitation, the list maintained by OFAC and accessible through the OFAC website)
that prohibits or limits any lender from making any advance or extension of
credit to Borrower or from otherwise conducting business with Borrower and
Guarantor, or (b) fail to provide documentary and other evidence of Borrower's
identity as may be requested by any lender at any time to enable any lender to
verify Borrower's identity or to comply with any applicable law or regulation,
including, without limitation, the Patriot Act. In addition, Borrower hereby
agrees to provide to Lender any additional information that Lender deems
necessary from time to time in order to ensure compliance with all applicable
laws concerning money laundering and similar activities.
Section 4.21 ALTERATIONS
Lender's prior approval shall be required in connection with any alterations to
any Improvements, exclusive of alterations to tenant spaces required under any
Lease, (a) that may have a material adverse effect on the Property, (b) that are
structural in nature or (c) that, together with any other alterations undertaken
at the same time (including any related alterations, improvements or
replacements), are reasonably anticipated to have a cost in excess of the
Alteration Threshold. If the total unpaid amounts incurred and to be incurred
with respect to such alterations to the Improvements shall at any time exceed
the Alteration Threshold, 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: (i) cash, (ii) direct
non-callable obligations of the United, States of America or other obligations
37
which are "government securities" within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, to the extent acceptable to the applicable
Rating Agencies, (iii) other securities acceptable to Lender and the Rating
Agencies, or (iv) a completion bond, provided that such completion bond is
acceptable to the Lender and the Rating Agencies. Such security shall be in an
amount equal to the excess of the total unpaid amounts incurred and to be
incurred with respect to such alterations to the Improvements over the
Alteration Threshold.
Section 4.22 PARKING RE-STRIPING.
Borrower shall cause the recently paved parking areas at the Property to be
restriped such that, at a minimum, the lawfully required number of parking
spaces exists at the Property, such restriping to be completed and performed to
the satisfaction of Lender and as necessary to bring the Property into
compliance with all applicable laws, ordinances, rules and regulations on or
before sixty (60) days from the date hereof, as such time period may be extended
by Lender in its sole discretion.
Section 4.23 UTILITY EASEMENT.
Borrower hereby represents and warrants that if that certain Utility Easement
from Diamond Hill Self Storage, LLC dated on or about August 20, 2003 and
recorded August 21, 2003 at in Book 1300 at Page 42 (the "UTILITY EASEMENT") for
the purpose of operating, maintaining, repairing or replacing a drain line,
overhead and underground electric and telephone lines is ever terminated, there
are sufficient alternative means of obtaining such utilities for the Property
and Borrower hereby covenants and agrees that upon any termination or impairment
of the Utility Easement, Borrower shall immediately and diligently take any and
all necessary steps to obtain such alternative service on both a temporary and
permanent basis.
ARTICLE 5 - ENTITY COVENANTS
Section 5.1 SINGLE PURPOSE ENTITY/SEPARATENESS
Until the Debt has been paid in full, Borrower represents, warrants and
covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership, operation and
maintenance of the Property, and activities incidental thereto;
(ii) acquire or own any assets other than (A) the Property, and (B) such
incidental Personal Property as may be necessary for the operation of the
Property;
(iii) merge into or consolidate with any Person, or dissolve, terminate,
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure;
(iv) fail to observe all organizational formalities, or fail to preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable)
38
under the applicable Legal Requirements of the jurisdiction of its organization
or formation, or amend, modify, terminate or fail to comply with the provisions
'of its organizational documents;
(v) own any subsidiary, or make any investment in, any Person;
(vi) commingle its assets with the assets of any other Person;
(vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) the Debt, (B) trade and operational
indebtedness incurred in the ordinary course of business with trade creditors,
provided such indebtedness is (I) unsecured, (2) not evidenced by a note, (3) on
commercially reasonable terms and conditions, and (4) due not more than sixty
(60) days past the date incurred and paid on or prior to such date, and/or (C)
financing leases and purchase money indebtedness incurred in the ordinary course
of business relating to Personal Property on commercially reasonable terms and
conditions; provided however, the aggregate amount of the indebtedness described
in (B) and (C) shall not exceed at any time two percent (2%) of the outstanding
principal amount of the Note;
(viii) fail to maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and apart
from those of any other Person; except that Borrower's financial position,
assets, liabilities, net worth and operating results may be included in the
consolidated financial statements of an Affiliate, provided that such
consolidated financial statements contain a footnote indicating that Borrower is
a separate legal entity and that it maintains separate books and records;
(ix) enter into any contract or agreement with any general partner, member,
shareholder, principal, guarantor of the obligations of Borrower, or any
Affiliate of the foregoing, except upon terms and conditions that are
intrinsically fair, commercially reasonable and substantially similar to those
that would be available on an arm's-length basis with unaffiliated third
parties;
(x) maintain its assets in such a manner that it will be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person;
(xi) assume or guaranty the debts of any other Person, hold itself out to be
responsible for the debts of any other Person, or otherwise pledge its assets
for the benefit of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or files a consolidated federal income
tax return with any Person (unless prohibited or required, as the case may be,
by applicable Legal Requirements);
39
(xiv) fail either to hold itself out to the public as a legal entity separate
and distinct from any other Person or to conduct its business solely in its own
name or fail to correct any known misunderstanding regarding its separate
identity;
(xv) fail to 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, provided that there are sufficient funds from
the operation of the Property to do so;
(xvi) if it is a partnership or limited liability company, without the unanimous
written consent of all of its partners or members, as applicable, and the
written consent of 100% of the managers of each SPE Component Entity (if any),
including, without limitation, each Independent Director (A) file or consent to
the filing of any petition, either voluntary or involuntary, to take advantage
of any Creditors Rights Laws, (B) seek or consent to the appointment of a
receiver, liquidator or any similar official, (C) take any action that might
cause such entity to become insolvent, or (D) make an assignment for the benefit
of creditors;
(xvii) fail to allocate shared expenses (including, without limitation, shared
office space and services performed by an employee of an Affiliate) among the
Persons sharing such expenses and to use separate stationery, invoices and
checks;
(xviii) fail to remain solvent or pay its own liabilities (including, without
limitation, salaries of its own employees) only from its own funds, provided
that there are sufficient funds from the operation of the Property to do so;
(xix) acquire obligations or securities of its partners, members, shareholders
or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with respect to
Borrower and SPE Component Entity in the Insolvency Opinion or in any revised
"non-consolidation" opinion delivered to Lender subsequent to the closing of the
Loan in accordance with the terms of this Agreement; or
(xxi) fail to maintain a sufficient number of employees in light of its
contemplated business operations.
(b) If Borrower is a partnership or limited liability company, each general
partner in the case of a general partnership, at least one general partner in
the case of a limited partnership, or the managing member in the case of a
limited liability company (each an "SPE COMPONENT ENTITY") of Borrower, as
applicable, shall be a corporation whose sole asset is its interest in Borrower.
Each SPE Component Entity (i) will at all times comply with each of the
covenants, terms and provisions contained in Section 5.1(a)(i) - (vi) and (viii)
- - (xx), as if such representation, warranty or covenant was made directly by
such SPE Component Entity; (ii) will not engage in any business or activity
other than owning an interest in Borrower; (iii) will not acquire or own any
assets other than its partnership, membership, or other equity interest in
Borrower; (iv) will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation); and (v) will cause Borrower
to comply with the provisions of this
40
Section 5.1 and Section 5.4 hereof. Prior to the withdrawal or the
disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose articles of
incorporation are substantially similar to those of such SPE Component Entity
and if an Insolvency Opinion was required to be delivered in connection with the
closing of the Loan, deliver a new substantive non-consolidation opinion letter
acceptable to Lender and the Rating Agencies with respect to the new SPE
Component Entity and its equity owners. Notwithstanding the foregoing, to the
extent Borrower is a single member Delaware limited liability company, so long
as Borrower maintains such formation status and complies with the requirements
set forth in subsection (c) below, no SPE Component Entity shall be required.
(c) In the event Borrower is a single member limited liability company, it shall
be organized under the laws of the State of Delaware, and the limited liability
company agreement of Borrower (the "LLC AGREEMENT") shall provide that (i) upon
the occurrence of any event that causes the sole member of Borrower ("Member")
to cease to be the member of Borrower (other than (A) upon an assignment by
Member of all of its limited liability company interest in Borrower and the
admission of the transferee in accordance with the Loan Documents and the LLC
Agreement, or (B) the resignation of Member and the admission of an additional
member of Borrower, in either case in accordance with the terms of the Loan
Documents and the LLC Agreement), any person acting as Independent Director of
Borrower ("SPECIAL MEMBER") shall, without any action of any other Person and
simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower and shall continue Borrower without
dissolution and (ii) Special Member may not resign from Borrower or transfer its
rights as Special Member unless (A) a successor Special Member has been admitted
to Borrower as Special Member in accordance with requirements of Delaware law
and (B) such successor Special Member has also accepted its appointment as an
Independent Director. The LLC Agreement shall further provide that (i) Special
Member shall automatically cease to be a member of Borrower upon the admission
to Borrower of a substitute Member, (ii) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and
has no right to receive any distributions of Borrower assets, (iii) pursuant to
Section 18-301 of the Delaware Limited Liability Company Act (the "Act"),
Special Member shall not be required to make any capital contributions to
Borrower and shall not receive a limited liability company interest in Borrower,
(iv) Special Member, in its capacity as Special Member, may not bind Borrower
and (v) except as required by any mandatory provision of the Act, Special
Member, in its capacity as Special Member, shall have no right to vote on,
approve or otherwise consent to any action by, or matter relating to, Borrower,
including, without limitation, the merger, consolidation or conversion of
Borrower; provided, however, such prohibition shall not limit the obligations of
Special Member, in its capacity as Independent Director, to vote on such matters
required by the Loan Documents or the LLC Agreement. In order to implement the
admission to Borrower of Special Member, Special Member shall execute a
counterpart to the LLC Agreement. Prior to its admission to Borrower as Special
Member, Special Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a member
of Borrower, to the fullest extent permitted by law, the personal representative
of Member shall, within ninety (90) days after the occurrence of the event that
terminated the continued membership of Member in Borrower, agree in writing (i)
to continue Borrower and (ii) to the
41
admission of the personal representative or its nominee or designee, as the case
may be, as a substitute member of Borrower, effective as of the occurrence of
the event that terminated the continued membership of Member of Borrower in
Borrower. Any action initiated by or brought against Member or Special Member
under any Creditors Rights Laws shall not cause Member or Special Member to
cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution. The LLC Agreement shall
provide that each of Member and Special Member waives any right it might have to
agree in writing to dissolve Borrower upon the occurrence of any action
initiated by or brought against Member or Special Member under any Creditors
Rights Laws, or the occurrence of an event that causes Member or Special Member
to cease to be a member of Borrower.
Section 5.2 CHANGE OF NAME, IDENTITY OR STRUCTURE
Borrower shall not change or permit to be changed (a) Borrower's name, (b)
Borrower's identity (including its trade name or names), (c) Borrower's
principal place of business set forth on the first page of this Agreement, (d)
the corporate, partnership or other organizational structure of Borrower, each
SPE Component Entity (if any), or Guarantor, (e) Borrower's state of
organization, or (f) Borrower's organizational identification number, without in
each case notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower's structure, without first obtaining the prior written consent of
Lender. In addition, Borrower shall not change or permit to be changed any
organizational documents of Borrower or any SPE Component Entity (if any) if
such change would adversely impact the covenants set forth in Section 5.1 and
Section 5.4 hereof. Borrower authorizes Lender to file any financing statement
or financing statement amendment required by Lender to establish or maintain the
validity, perfection and priority of the security interest granted herein. At
the request of Lender, Borrower shall execute a certificate in form satisfactory
to Lender listing the trade names under which Borrower intends to operate the
Property, and representing and warranting that Borrower does business under no
other trade name with respect to the Property. If Borrower does not now have an
organizational identification number and later obtains one, Borrower shall
promptly notify Lender of such organizational identification number.
Section 5.3 BUSINESS AND OPERATIONS
Borrower will qualify to do business and will remain in good standing under the
laws of the state in which the Property is located.
Section 5.4 INDEPENDENT DIRECTOR
(j) The organizational documents of each SPE Component Entity (if any) shall
provide that at all times there shall be, and Borrower shall cause there to be,
at least one duly appointed member of the board of directors (each an
"INDEPENDENT DIRECTOR") of such SPE Component Entity reasonably satisfactory to
Lender each of whom are not at the time of such individual's initial
appointment, and shall not have been at any time during the preceding five (5)
years, and shall not be at any time while serving as a director of such SPE
Component Entity, either (i) a shareholder (or other equity owner) of, or an
officer, director, partner, manager, member (other than as a Special Member in
the case of single member Delaware limited liability
42
company), employee, attorney or counsel of, Borrower, such SPE Component Entity
or any of their respective shareholders, partners, members, subsidiaries or
affiliates; (ii) a customer or creditor of, or supplier to, Borrower or any of
its respective shareholders, partners, members, subsidiaries or affiliates who
derives any of its purchases or revenue from its activities with Borrower or
such SPE Component Entity or any Affiliate of any of them; (iii) a Person who
Controls or is under common Control with any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer; or
(iv) a member of the immediate family of any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer.
The organizational documents of each SPE Component Entity (if any) shall provide
that the board of directors of such SPE Component Entity shall not take any
action which, under the terms of any certificate of incorporation, by-laws or
any voting trust agreement with respect to any common stock, requires an
unanimous vote of the board of directors of such SPE Component Entity of
Borrower unless at the time of such action there shall be at least one member of
the board of directors who is an Independent Director. Such SPE Component Entity
will not, without the unanimous written consent of its board of directors,
including the Independent Director[s], on behalf of itself or Borrower, (i) file
or consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable Creditors Rights Laws; (ii) seek or consent to
the appointment of a receiver, liquidator or any similar official; (iii) take
any action that might cause such entity to become insolvent; or (iv) make an
assignment for the benefit of creditors.
ARTICLE 6 - NO SALE OR ENCUMBRANCE
Section 6.1 TRANSFER DEFINITIONS
For purposes of this Article 6, an "AFFILIATED MANAGER" shall mean any property
manager in which Borrower, Guarantor, any SPE Component Entity or any affiliate
of such entities has, directly or indirectly, any legal, beneficial or economic
interest; "CONTROL" shall mean the power to direct the management and policies
of a Restricted Party, directly or indirectly, whether through the ownership of
voting securities or other beneficial interests, by contract or otherwise;
"RESTRICTED PARTY" shall mean Borrower, Guarantor, any SPE Component Entity, any
Affiliated Manager, or any shareholder, partner, member or non-member manager,
or any direct or indirect legal or beneficial owner of Borrower, Guarantor, any
SPE Component Entity, any Affiliated Manager or any non-member manager; and a
"SALE OR PLEDGE" shall mean a voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options
with respect to, or any other transfer or disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) a legal or beneficial interest.
Section 6.2 NO SALE/ENCUMBRANCE
(a) Borrower shall not cause or permit a Sale or Pledge of the Property or any
part thereof or any legal or beneficial interest therein nor permit a Sale or
Pledge of an interest in any Restricted Party (in each case, a "PROHIBITED
TRANSFER"), other than pursuant to Leases of space
43
in the Improvements to Tenants in accordance with the provisions of Section
4.13, without the prior written consent of Lender.
(b) A Prohibited 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 in one or a series of transactions; (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 any partnership interest in the
Restricted Party of any general or limited partner or any profits or proceeds
relating to such partnership interests or the creation or issuance of new
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 any membership interest in the Restricted Party of any
member or any profits or proceeds relating to such membership interest; (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 Manager (including, without limitation, an Affiliated
Manager) other than in accordance with Section 4.14.
Section 6.3 PERMITTED TRANSFERS
Notwithstanding the provisions of Section 6.2, the following transfers shall not
be deemed to be Prohibited Transfers: (a) a transfer by devise or descent or by
operation of law upon the death of a member, partner or shareholder of a
Restricted Party, so long as Borrower delivers notice to Lender as soon as
practicable thereafter and that such Restricted Party is promptly reconstituted,
if applicable, following the death of such member, partner or shareholder; (b)
transfers for estate planning purposes of an individual's interests in any
Restricted Party to the spouse or any lineal descendant of such individual, or
to a trust for the benefit of any one or more of such individual, spouse or
lineal descendant, so long as such Restricted Party is reconstituted, if
required, following such transfer and there is no change in Control of such
Restricted Party as a result of such transfer; (c) transfers, in one or a series
of transactions, of not more than forty-nine percent (49%) of the stock, limited
partnership interests or non-managing membership interests (as the case may be)
in a Restricted Party; provided, however, (i) no such transfers shall result in
a change in Control in the Restricted Party or a change in control of the
Property, (ii) following any such transfers Borrower and any SPE Component
Entity shall continue to satisfy the requirements of Section 5.1 hereof, and
(iii) as a condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer; or (d) the
sale, transfer or issuance of stock in Acadia Realty Trust provided such stock
is listed on the New York Stock Exchange or such other nationally recognized
stock exchange. Notwithstanding the foregoing, any transfer that results in any
Person owning in excess of forty-nine percent (49%) of the ownership interest in
a Restricted Party shall comply with the requirements of Section 6.4 hereof.
44
Section 6.4 LENDER'S RIGHTS
Lender reserves the right to condition the consent to a Prohibited Transfer
requested hereunder upon, among other things, modification of the terms of the
Loan Documents, payment of transfer fees, Rating Agency fees, receipt of a
Ratings Confirmation, and the satisfaction of such other conditions as Lender
shall reasonably determine in its discretion to be in the interest of Lender.
All reasonable expenses incurred by Lender shall be payable by Borrower whether
or not Lender consents to the Prohibited Transfer. 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
a Prohibited Transfer made without Lender's consent. This provision shall apply
to each and every Prohibited Transfer, whether or not Lender has consented to
any previous Prohibited Transfer. Notwithstanding anything to the contrary
contained in this Section 6.4, in the event an Insolvency Opinion was delivered
to Lender and the Rating Agencies in connection with the closing of the Loan,
and if any Sale or Pledge permitted under this Article 6 results in any Person
and its Affiliates owning in excess of forty-nine percent (49%) of the ownership
interests in a Restricted Party, Borrower shall, prior to such transfer, and in
addition to any other requirement for Lender's consent contained herein, deliver
a revised substantive non-consolidation opinion to Lender reflecting such
Prohibited Transfer, which opinion shall be in form, scope and substance
acceptable in all respects to Lender and the Rating Agencies.
Section 6.5 ASSUMPTION
Notwithstanding the foregoing provisions of this Article 6, following the date
which is one (1) year from the Closing Date, provided such date is not within
sixty (60) days of a Securitization of the Loan, Lender shall not unreasonably
withhold consent to a transfer of the Property in its entirety to, and the
related assumption of the Loan by, any Person (a "TRANSFEREE") provided that
each of the following terms and conditions are satisfied:
(a) no Default or Event of Default has occurred and is continuing;
(b) Borrower shall have delivered written notice to Lender of the terms of such
prospective transfer not less than thirty (30) days before the date on which
such transfer is scheduled to close and, concurrently therewith, all such
information concerning the proposed Transferee as Lender shall reasonably
require. Lender shall have the right to approve or disapprove the proposed
transfer based on its then current underwriting and credit requirements for
similar loans secured by similar properties which loans are sold in the
secondary market, such approval not to be unreasonably withheld. In determining
whether to give or withhold its approval of the proposed transfer, Lender shall
consider the experience and track record of Transferee and its principals in
owning and operating facilities similar to the Property, the financial strength
of Transferee and its principals, the general business standing of Transferee
and its principals and Transferee's and its principals' relationships and
experience with contractors, vendors, tenants, lenders and other business
entities; provided, however, that, notwithstanding Lender's agreement to
consider the foregoing factors in determining whether to give or withhold such
approval, such approval shall be given or withheld based on what Lender
determines to be commercially reasonable and, if given, may be given subject to
such conditions as Lender may deem reasonably appropriate;
45
(c) Borrower shall have paid to Lender, concurrently with the closing of such
transfer, (i) a non-refundable assumption fee in an amount equal to one half of
one percent (0.5%) of the then outstanding principal balance of the Note, and
(ii) all out-of-pocket costs and expenses, including reasonable attorneys' fees
and Rating Agency fees, incurred by Lender in connection with the transfer;
(d) (i) Transferee shall have assumed and agreed to pay the Debt as and when due
and shall have assumed all other obligations of Borrower under the Loan
Documents subject to the provisions of Article 14 hereof and, prior to or
concurrently with the closing of such transfer, Transferee and its constituent
partners, members or shareholders as Lender may require, shall have executed,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate said assumption and (ii) if
required by Lender, a Person affiliated with Transferee and acceptable to Lender
shall have assumed the obligations of Guarantor under the Loan Documents;
(e) Borrower and Transferee, without any cost to Lender, shall furnish any
information requested by Lender for the preparation of, and shall authorize
Lender to file, new financing statements and financing statement amendments and
other documents to the fullest extent permitted by applicable law, and shall
execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or expense to
Lender, such endorsements to Lender's Title Insurance Policy insuring that fee
simple to the Property is vested in Transferee (subject to Permitted
Encumbrances), hazard insurance endorsements or certificates and other similar
materials as Lender may deem necessary at the time of the transfer, all in form
and substance satisfactory to Lender;
(g) Transferee shall have furnished to Lender all appropriate documents
evidencing Transferee's organization and good standing, and the qualification of
the signers to execute the assumption of the Debt, which documents shall include
certified copies of all documents relating to the organization and formation of
Transferee and of the entities, if any, which are partners or members of
Transferee. Transferee and such constituent partners, members or shareholders of
Transferee (as the case may be), as Lender shall require, shall comply with the
covenants set forth in Article 5 hereof;
(h) Transferee shall assume the obligations of Borrower under any Management
Agreement or provide a new management agreement with a new manager which meets
with the requirements of Section 4.14 hereof and assign to Lender as additional
security such new management agreement;
(i) Transferee shall furnish opinions of counsel satisfactory to Lender and its
counsel (A) that Transferee's formation documents provide for the matters
described in subparagraph (g) above, (B) that the assumption of the Debt has
been duly authorized, executed and delivered, and that the Note, the Security
Instrument, this Agreement, the assumption agreement and the other Loan
Documents are valid, binding and enforceable against Transferee in accordance
with their terms, (C) that Transferee and any entity which is a controlling
shareholder, member or general
46
partner of Transferee, have been duly organized, and are in existence and good
standing, and (E) with respect to such other matters as Lender may reasonably
request;
(j) if required by Lender, Lender shall have received a Ratings Confirmation in
connection with the transfer;
(k) Borrower's obligations under the contract of sale pursuant to which the
transfer is proposed to occur shall expressly be subject to the satisfaction of
the terms and conditions of this Section 6.5; and
(1) in the event an Insolvency Opinion was required in connection with the
closing of the Loan, Transferee shall, prior to such transfer, deliver a
substantive non-consolidation opinion to Lender, which opinion shall be in form,
scope and substance acceptable in all respects to Lender and the Rating
Agencies.
A consent by Lender with respect to a transfer of the Property in its entirety
to, and the related assumption of the Loan by, a Transferee pursuant to this
Section 6.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent Sale or Pledge of the Property. Upon the transfer of
the Property pursuant to this Section 6.5, Borrower and Guarantor shall be
relieved of all liability under the Loan Documents for acts, events, conditions,
or circumstances occurring or arising after the date of such transfer, except to
the extent that such acts, events, conditions, or circumstances are the
proximate result of acts, events, conditions, or circumstances that existed
prior to the date of such transfer, whether or not discovered prior or
subsequent to the date of such transfer. All expenses incurred by Lender
pursuant to this Section 6.5 shall be payable by Borrower whether or not the
transfer contemplated hereunder actually occurs.
ARTICLE 7 - INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 7.1 INSURANCE
(a) Borrower shall obtain and maintain, or cause to be maintained, at all times
insurance for Borrower and the Property providing at least the following
coverages:
(i) comprehensive all risk insurance on the Improvements and the Personal
Property, (A) in an amount equal to 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
replacement cost endorsement and agreed amount endorsement, with a waiver of
depreciation; (B) written on a replacement cost basis and containing either an
agreed amount endorsement with respect to the Improvements and Personal Property
or a waiver of all co-insurance provisions; (C) providing for no deductible in
excess of $25,000 or such other amount approved by Lender for all such insurance
coverage; (D) at all times insuring against at least those hazards that are
commonly insured against under a "special causes of loss" form of policy, as the
same shall exist on the date hereof, and together with any increase in the scope
of coverage provided under such form after the date hereof; and (E) if any of
the Improvements or the use of the Property shall at any time constitute legal
non-conforming structures or uses, providing coverage for contingent liability
from Operation
47
of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements and containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement. In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a "special
flood hazard area" designated by the Federal Emergency Management Agency, flood
hazard insurance in an amount equal to 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; and (z) earthquake insurance in amounts and in form and
substance reasonably satisfactory to Lender in the event the Property is located
in an area with a high degree of seismic risk, provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent with the
comprehensive all risk policy required under this subsection (i);
(ii) commercial general liability insurance against claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, with such insurance (A) to be on the so-called "occurrence" form with
a general aggregate limit of not less than $2,000,000 and a per occurrence limit
of not less than $1,000,000; (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; (3) independent contractors; and (4) contractual liability;
(iii) loss of rents insurance or business income insurance, as applicable, (A)
with loss payable to Lender; (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above; and (C) which provides that
after the physical loss to the Improvements and Personal Property occurs, the
loss of rents or income, as applicable, will be insured until completion of
Restoration or the expiration of twelve (12) months, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period; and
(D) which contains 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
eighteen (18) 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 loss of
rents or business income insurance, as applicable, shall be determined prior to
the date hereof and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the succeeding
period of coverage as required above. 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 the Note, this
Agreement and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such loss of rents or business income
insurance, as applicable;
48
(iv) 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 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 "special causes of loss" 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;
(v) workers' compensation, subject to the statutory limits of the state in which
the Property is located, and employer's liability insurance in respect of any
work or operations on or about the Property, or in connection with the Property
or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as
shall be reasonably required by Lender on terms consistent with the commercial
property insurance policy required under subsection (i) above;
(vii) umbrella and excess liability insurance in an amount not less than
$2,000,000 per occurrence on terms consistent with the commercial general
liability insurance required under subsection (ii) above; and
(viii) upon sixty (60) days' written notice, such other reasonable insurance and
in such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards (including, but not limited to, earthquake,
sinkhole, mine subsidence, windstorm, mold, spores or fungus) 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.
The insurance required under this Section 7.1(a) above shall cover perils of
terrorism, acts of terrorism (including bio-terrorism) or similar acts of
sabotage and Borrower shall maintain insurance for losses resulting from perils
and acts of terrorism on terms (including amounts) consistent with those
required under this Section 7.1(a) above at all times during the term of the
Loan.
(b) All insurance provided for in Section 7.1(a) 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 in which the Property is located and having a claims
paying ability/financial strength rating of "A" (or its equivalent) or better by
at least two (2) Rating Agencies (one of which shall be S&P if they are rating
the Securities and one of which shall be Moody's if they are rating the
securities), or if only one Rating Agency is rating the Securities, then only
such Rating Agency, or such other rating acceptable to Lender. The Policies
described in Section 7.1(a) shall designate Lender and its successors and
assigns as additional insureds, mortgagees and/or loss payee as deemed
appropriate by Lender. To the
49
extent such Policies are not available as of the Closing Date, Borrower shall
deliver to Lender prior to the Closing Date a certificate of insurance
evidencing the coverages and amounts required hereunder and, upon request of
Lender as soon as available after the Closing Date, certified copies of all
Policies. Not less than ten (10) days prior to the expiration dates of any
insurance coverage in place with respect to Borrower and/or the Property,
Borrower shall deliver to Lender a certificate, accompanied by evidence
satisfactory to Lender of payment of the premiums due in connection therewith
(the "INSURANCE PREMIUMS"), and, as soon as available thereafter, certified
copies of all renewal Policies.
(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 7.1(a).
(d) All Policies provided for or contemplated by Section 7.1(a), except for the
Policy referenced in Section 7.1(a)(v), 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 standard non-contributing mortgagee clause in favor of Lender
providing that the loss thereunder shall be payable to Lender.
All Policies provided for in Section 7.1(a) shall contain clauses or
endorsements to the effect that:
(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 Policies shall not be materially changed (other than to increase the
coverage provided thereby) or canceled by the insurer without at least thirty
(30) days' prior 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 Policies
have 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.
(e) 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,
obtaining such insurance coverage as Lender in its sole discretion deems
appropriate. 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 Security
Instrument and shall bear interest at the Default Rate.
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Section 7.2 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 Restoration
of the Property in accordance with Section 7.4. 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. Borrower shall adjust all claims for Insurance Proceeds in
consultation with, and approval of, Lender (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
$500,000 and Borrower shall deliver to Lender all instruments required by Lender
to permit such participation; provided, however, if an Event of Default has
occurred and is continuing, Lender shall have the exclusive right to participate
in the adjustment of all claims for Insurance Proceeds.
Section 7.3 CONDEMNATION
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of the Property of which
Borrower has knowledge 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 the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 7.4, whether or not
Lender makes any Net Proceeds available pursuant to Section 7.4. 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 7.4 RESTORATION
The following provisions shall apply in connection with the Restoration of the
Property:
(a) If the Net Proceeds shall be less than $1,500,000.00 and the costs of
completing the Restoration shall be less than $1,500,000.00, the Net Proceeds
will be disbursed by Lender to Borrower upon receipt, provided that (i) no Event
of Default has occurred and is continuing, and
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(ii) 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 $1,500,000.00 or the costs
of completing the Restoration are equal to or greater than $1,500,000.00, Lender
shall make the Net Proceeds available for the Restoration subject to the
conditions of and in accordance with the provisions of this Section 7.4. The
term "NET PROCEEDS" for purposes of this Section 7.4 shall mean: (i) the net
amount of all insurance proceeds received by Lender pursuant to Section
7.1(a)(i), (iv) and (vi) as a result of a Casualty, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting the same ("INSURANCE PROCEEDS"), or (ii) the net
amount of the Award as a result of a Condemnation, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting the 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 thirty
percent (30%) of the total floor area of the Improvements on the Property has
been damaged, destroyed or rendered unusable as a result of a Casualty and the
amount of damage does not exceed thirty percent (30%) of the Property's fair
market value immediately prior to the occurrence 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, such land is located along the
perimeter or periphery of the Property, and less than fifteen percent (15%) of
the total floor area of the Improvements is taken and the taking does not exceed
fifteen percent (15%) of the Property's fair market value immediately prior to
the occurrence of such taking;
(C) Leases demising in the aggregate a percentage amount equal to or greater
than sixty-six percent (66%) of the total rentable space in at 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 furnishes to Lender
evidence satisfactory to Lender that all tenants under Major Leases shall
continue to operate their respective space at the Property after the completion
of the Restoration
(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;
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(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 the
insurance coverage referred to in Section 7.1(a)(iii) above;
(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
or material agreements affecting the Property, (3) such time as may be required
under applicable zoning law, ordinance, rule or regulation, or (4) the
expiration of the insurance coverage referred to in Section 7.1(a)(iii);
(G) the Property and the use thereof after the Restoration will be in compliance
with and permitted under all Legal Requirements;
(H) Lender shall be satisfied that the Debt Service Coverage Ratio for the
Property, after giving effect to the Restoration, shall be equal to or greater
than 1.15 to 1.0;
(I) the Restoration shall be done and completed by Borrower in an expeditious
and diligent fashion and in compliance with all applicable Legal Requirements;
(J) such Casualty or Condemnation, as applicable, does not result in the loss of
access to the Property or the Improvements;
(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 reasonable judgment to cover the
cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender until disbursements commence, and,
until disbursed in accordance with the provisions of this Section 7.4(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 the conditions precedent to such
advance, including those set forth in Section 7.4(b), have been satisfied, (B)
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 related Restoration item have been paid for in full, and (C) 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
53
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. Notwithstanding the foregoing, Insurance
Proceeds from the Policies required to be maintained by Borrower pursuant to
Section 7.1(a)(iii) shall be controlled by Lender at all times, shall not be
subject to the provisions of this Section 7.4 and shall be used solely for the
payment of the obligations under the Loan Documents and Operating Expenses.
(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 "RESTORATION
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 in excess of $100,000 under
which they have been engaged, shall be subject to prior review and acceptance by
Lender and the Restoration 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
Restoration Consultant's fees, shall be paid by Borrower.
(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
Restoration Consultant, minus the Restoration Retainage. The term "RESTORATION
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
Restoration Consultant, until the Restoration has been completed. The
Restoration Retainage shall be reduced to five percent (5%) of the costs
incurred upon receipt by Lender of satisfactory evidence that fifty percent
(50%) of the Restoration has been completed. The Restoration Retainage shall in
no event, and notwithstanding anything to the contrary set forth above in this
Section 7.4(b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The
Restoration Retainage shall not be released until the Restoration Consultant
certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Section 7.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
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 Restoration Retainage; provided, however, that Lender will release
the portion of the Restoration Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the
date upon which the Restoration 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 Security Instrument
and evidence of payment of any premium
54
payable for such endorsement. If required by Lender, the release of any such
portion of the Restoration 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 reasonable opinion of Lender in consultation with the Restoration
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Restoration 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 7.4(b) shall constitute additional security for the Debt and other
obligations under the Loan Documents.
(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 Restoration
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 7.4(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 remitted by Lender to Borrower,
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
7.4(b)(vii) may (x) be retained and applied by Lender toward the payment of the
Debt whether or not then due and payable in such order, priority and proportions
as Lender in its sole discretion shall deem proper, or, (y) at the sole
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes and upon such conditions as Lender shall designate.
(d) In the event of foreclosure of the Security Instrument, 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 then in force
concerning the Property and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.
ARTICLE 8 - RESERVE FUNDS
Section 8.1 REQUIRED REPAIRS
(a) Borrower shall make the repairs and improvements to the Property set forth
on Exhibit D attached hereto and made a part hereof (such repairs hereinafter
referred to as
55
"REQUIRED REPAIRS"). Borrower shall complete the Required Repairs in a good and
workmanlike manner on or before the date that is three (3) months from the date
hereof or within such other time frame for completion specifically set forth on
Exhibit D.
(b) Borrower shall deposit with Lender on the date hereof the amount set forth
in Exhibit C attached hereto and made a part hereof, which amount equals 125% of
the estimated cost for the completion of the Required Repairs. Amounts so
deposited shall hereinafter be referred to as the "REQUIRED REPAIR FUNDS" and
the account in which such amounts are held shall hereinafter be referred to as
the "REQUIRED REPAIR ACCOUNT".
Section 8.2 REPLACEMENTS
(a) On an ongoing basis throughout the term of the Loan, Borrower shall make
capital repairs, replacements and improvements necessary to keep the Property in
good order and repair and in a good marketable condition or prevent
deterioration of the Property (collectively, the "REPLACEMENTS"). Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
commercially reasonable after commencing to make each such Replacement.
(b) Borrower shall deposit with Lender on the date hereof the initial amount
(the "REPLACEMENT RESERVE INITIAL DEPOSIT") set forth on Exhibit C and on each
Scheduled Payment Date the monthly amount (the "REPLACEMENT RESERVE MONTHLY
DEPOSIT") set forth on Exhibit C. Amounts so deposited shall hereinafter be
referred to as "REPLACEMENT RESERVE FUNDS" and the account in which such amounts
are held shall hereinafter be referred to as the "REPLACEMENT RESERVE ACCOUNT".
Lender may, in its reasonable discretion, adjust the Replacement Reserve Monthly
Deposit from time to time to an amount sufficient to maintain the proper
maintenance and operation of the Property.
Section 8.3 INTENTIONALLY OMITTED.
Section 8.4 REQUIRED WORK
(a) Borrower shall diligently pursue all Required Repairs and Replacements
(collectively, the "REQUIRED WORK") to completion in accordance with the
following requirements:
(b) Lender reserves the right, at its option, to approve all contracts or work
orders for more than $50,000 with materialmen, mechanics, suppliers,
subcontractors, contractors or other parties providing labor or materials in
connection with the Required Work. 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
Required Work is not being or has not been performed in a workmanlike or timely
manner, Lender shall have the option to withhold disbursement for such
unsatisfactory Required Work and to proceed under existing contracts or to
contract with third parties to complete such Required Work and to apply the
Required Repair Funds or the Replacement Reserve Funds, as applicable, toward
the labor and materials necessary to complete such Required Work, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon an Event of Default hereunder.
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(d) In order to facilitate Lender's completion of the Required Work, Borrower
grants Lender the right to enter onto the Property and perform any and all work
and labor necessary to complete the Required Work and/or employ watchmen to
protect the Property from damage. All sums so expended by Lender, to the extent
not from the Reserve Funds, shall be deemed to have been advanced under the Loan
to Borrower and secured by the Security Instrument. For this purpose Borrower
constitutes and appoints Lender its true and lawful attorney-in-fact with full
power of substitution to complete or undertake the Required Work in the name of
Borrower upon Borrower's failure to do so in a workmanlike and timely manner.
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 of the Reserve Funds for the purpose of making or completing the
Required Work; (ii) to make such additions, changes and corrections to the
Required Work as shall be necessary or desirable to complete the Required Work;
(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 the
Required Work, 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 on its own behalf to
fulfill the terms of this Agreement.
(e) Nothing in this Section 8.4 shall: (i) make Lender responsible for making or
completing the Required Work; (ii) require Lender to expend funds in addition to
the Reserve Funds to make or complete any Required Work; (iii) obligate Lender
to proceed with the Required Work; or (iv) obligate Lender to demand from
Borrower additional sums to make or complete any Required Work.
(f) Borrower shall permit Lender and Lender's agents and representatives
(including, without limitation, Lender's engineer, architect, or inspector) or
third parties performing Required Work pursuant to this Section 8.4 to enter
onto the Property during normal business hours (subject to the rights of Tenants
under their Leases) to inspect the progress of any Required Work and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Required Work which are or may be kept at the
Property, and to complete any Required Work made pursuant to this Section 8.4.
Borrower shall cause all contractors and subcontractors to cooperate with Lender
and Lender's representatives or such other persons described above in connection
with inspections described in this Section 8.4 or the completion of Required
Work pursuant to this Section 8.4.
(g) Lender may, to the extent any Required Work would reasonably require an
inspection of the Property, inspect the Property at Borrower's expense prior to
making a disbursement of the Reserve Funds in order to verify completion of the
Required Work for which reimbursement is sought. Borrower shall pay Lender a
reasonable inspection fee not exceeding $1,000 for each such inspection. 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 the Reserve Funds.
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(h) The Required Work and all materials, equipment, fixtures, or any other item
comprising a part of any Required Work shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other Liens (except for Permitted Encumbrances).
(i) Before each disbursement of the Reserve Funds, 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 or
other Liens of any nature have been placed against the Property since the date
of recordation of the Security Instrument and that title to the Property is free
and clear of all Liens (except for Permitted Encumbrances).
(j) All Required Work shall comply with all Legal Requirements and applicable
insurance requirements including, without limitation, applicable building codes,
special use permits, environmental regulations, and requirements of insurance
underwriters.
Section 8.5 RELEASE OF RESERVE FUNDS
(a) Upon written request from Borrower and satisfaction of the requirements set
forth in this Section 8.5(a), Lender shall disburse to Borrower amounts from (i)
the Required Repair Account to the extent necessary to pay for or to reimburse
Borrower for the actual costs of each Required Repair (but not exceeding 125% of
the original estimated cost of such Required Repair as set forth on Exhibit C,
unless otherwise agreed by Lender) or (ii) the Replacement Reserve Account to
the extent necessary to reimburse Borrower for the actual costs of any approved
Replacements. Notwithstanding the preceding sentence, in no event shall Lender
be required to (x) disburse any amounts which would cause the amount of funds
remaining in the Required Repair Account after any disbursement (other than with
respect to the final disbursement) to be less than 125% of the then current
estimated cost of completing all remaining Required Repairs for the Property,
(y) disburse funds from any of the Reserve Accounts if an Event of Default has
occurred and is continuing, or (z) disburse funds from the Replacement Reserve
Account to reimburse Borrower for the costs of routine repairs or maintenance to
the Property or for costs which are to be reimbursed from funds held in the
Required Repair Account.
(b) With each request for disbursement, Borrower shall certify in writing to
Lender that all Required Work has been performed in accordance with all Legal
Requirements and that all such Required Work has been completed lien free and
paid for in full or will be paid for in full upon disbursement of the requested
funds. In addition, each request for disbursement shall be on a form provided or
approved by Lender and shall (i) include copies of invoices for all items or
materials purchased and all labor or services provided, (ii) specify (A) the
Required Work for which the disbursement is requested, (B) the quantity and
price of each item purchased, if the Required Work includes the purchase or
replacement of specific items, (C) the price of all materials (grouped by type
or category) used in any Required Work other than the purchase or replacement of
specific items, and (D) the cost of all contracted labor or other services
applicable to each Required Work for which such request for disbursement is
made, (iii) for requests for disbursement in excess of $25,000, if requested by
Lender, conditional lien waivers from each contractor, supplier, materialman,
mechanic or subcontractor with respect to the completion of its work or delivery
of its materials. Except as provided in Section 8.5(d), each request for
disbursement shall be made only after completion of the Required Repair or
Replacement (or the
58
portion thereof completed in accordance with Section 8.5(d)), as applicable, for
which disbursement is requested. Borrower shall provide Lender evidence
satisfactory to Lender in its reasonable judgment of such completion or
performance.
(c) Any lien waiver delivered hereunder shall conform to all Legal Requirements
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 disbursement
request.
(d) If (i) the cost of any item of Required Work exceeds $50,000, (ii) the
contractor performing such Required Work 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 disbursement from the Reserve Accounts 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 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, and (D) in
the case of a Replacement, funds remaining in the Replacement Reserve Account
are, in Lender's judgment, sufficient to complete such Replacement and other
Replacements when required.
(e) Borrower shall not make a request for, nor shall Lender have any obligation
to make, any disbursement from any Reserve Account more frequently than once in
any calendar month and (except in connection with the final disbursement) in any
amount less than the lesser of (i) $10,000 or (ii) the total cost of the
Required Work for which the disbursement is requested.
(f) The insufficiency of any balance in any of the Reserve Accounts shall not
relieve Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.
(g) Upon the timely completion of all Required Repairs in accordance with the
requirements of this Agreement, as verified by Lender in its reasonable
discretion, all amounts remaining on deposit, if any, in the Required Repair
Account shall be returned to Borrower and no other party shall have any right or
claim thereto.
(h) Upon payment in full of the Debt, or upon a release of the lien of the
Security Instrument in connection with a Defeasance Event, all amounts remaining
on deposit, if any, in the Reserve Accounts shall be returned to Borrower as
being the owner of the Property and no other party shall have any right or claim
thereto.
Section 8.6 TAX AND INSURANCE RESERVE FUNDS
Borrower shall deposit with Lender on the date hereof an amount set forth in
Exhibit C, which amount, when added to the required monthly deposits set forth
in the next sentence, is sufficient to make the payments of Taxes and Insurance
Premiums as required herein. Borrower shall deposit with Lender on each
Scheduled Payment Date (a) one-twelfth of the Taxes that Lender estimates will
be payable during the next ensuing twelve (12) months or such higher amount
necessary to accumulate with Lender sufficient funds to pay all such Taxes at
least thirty (30) days prior to the earlier of (i) the date that the same will
become delinquent and (ii) the date
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that additional charges or interest will accrue due to the non-payment thereof,
and (b) one-twelfth of the Insurance Premiums that Lender estimates will be
payable during the next ensuing twelve (12) months for the renewal of the
coverage afforded by the Policies upon the expiration thereof or such higher
amount necessary to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the
Policies (such amounts in (a) and (b) above hereinafter called the "TAX AND
INSURANCE RESERVE FUNDS" and the account for which such amounts are held
hereinafter called the "TAX AND INSURANCE RESERVE ACCOUNT"). Provided no Event
of Default has occurred and is continuing, Lender will apply the Tax and
Insurance Reserve Funds to payments of Taxes and Insurance Premiums required to
be made by Borrower pursuant to Section 4.4 and Section 7.1 hereof. In making
any disbursement from the Tax and Insurance Reserve Account, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office or tax lien service (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 Reserve Funds shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 4.4 and Section 7.1 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 Reserve Account. Upon the
Debt being paid in full or upon a release of the lien of the Security Instrument
in connection with a Defeasance Event, any amount remaining in the Tax and
Insurance Reserve Account shall be returned to Borrower. If at any time Lender
reasonably determines that the Tax and Insurance Reserve Funds are not or will
not be sufficient to pay Taxes and Insurance Premiums by the dates set forth in
(a) and (b) above, Lender shall notify Borrower of such determination and
Borrower shall pay to Lender any amount necessary to make up the deficiency
within ten (10) days after notice from Lender to Borrower requesting payment
thereof.
Notwithstanding anything to the contrary set forth in this Section 8.6, Lender
shall not require Borrower to pay any initial deposit or any monthly deposits to
the Tax and Insurance Reserve Account for Insurance Premiums provided (i) no
Event of Default then exists, (ii) Borrower is not in default under this
Agreement in any of its obligations to timely pay Insurance Premiums, and (iii)
Borrower delivers to Lender either a certificate or certified copy of the
renewal policy evidencing the renewal of any expiring insurance policies within
the time periods required under this Agreement. Upon the failure of any of the
requirements set forth in the preceding sentence to be satisfied as determined
by Lender, Lender may, at its sole option exercised in its sole and absolute
discretion, require Borrower to commence paying monthly deposits to the Tax and
Insurance Reserve on account of Insurance Premiums set forth in this Section
8.6.
Section 8.7 INTENTIONALLY OMITTED.
Section 8.8 INTENTIONALLY OMITTED.
Section 8.9 INITIAL DEBT SERVICE RESERVE
(a) Concurrently with the execution of this Agreement, Borrower shall deposit on
the date hereof the initial amount set forth on Exhibit C which shall equal one
(1) regular monthly installment of principal, interest and all required
reserves, deposits or impounds, as determined
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by Lender. Amounts so deposited shall hereinafter be referred to as "INITIAL
DEBT SERVICE RESERVE FUNDS" and the account in which such amounts are held shall
hereinafter be referred to as the "INITIAL DEBT SERVICE RESERVE ACCOUNT". No
monthly deposits into the Debt Service Reserve Account are required.
(b) The Initial Debt Service Reserve Funds shall be applied by Lender, without
any notice to Borrower, to pay principal, interest and all required reserves,
deposits or impounds due on the first Scheduled Payment Date.
Section 8.10 WOONSOCKET BOWLING- RESERVE
(a) Borrower shall deposit with Lender on the date hereof the initial amount set
forth on Exhibit C (the "WOONSOCKET BOWLING RESERVE FUNDS"). The account in
which such amounts are held shall hereinafter be referred to as the "WOONSOCKET
BOWLING RESERVE ACCOUNT".
(b) Provided that no Event of Default shall have occurred and be continuing,
upon the request of Borrower, Lender shall disburse the Woonsocket Bowling
Reserve Funds to Borrower upon Lender's receipt of (i) a copy of the permanent
certificate of occupancy for the Woonsocket Bowling Space and (ii) a tenant
estoppel certificate from Woonsocket Bowling which certifies, among other things
(1) that Woonsocket Bowling is occupying all of the Woonsocket Bowling Space, is
open for business and is paying base rent in accordance with the Woonsocket
Bowling Lease, (2) that all of the obligations of Borrower under the Woonsocket
Bowling Lease which are required to be fulfilled as of the date of the tenant
estoppel certificate have been duly performed and completed including, without
limitation, any obligations of Borrower to make or to pay or reimburse
Woonsocket Bowling for any Tenant Improvements and Leasing Commissions
pertaining to the Woonsocket Bowling Space, (3) that the improvements described
in the Woonsocket Bowling Lease have been constructed in accordance with the
plans and specifications therefor and have been accepted by Woonsocket Bowling,
(4) that Woonsocket Bowling is not then entitled to any concession or rebate of
rent or other charges from time to time due and payable under the Woonsocket
Bowling Lease (5) that there are no unpaid or unreimbursed construction or other
allowances or other offsets due Woonsocket Bowling under the Woonsocket Bowling
Lease which are then due and payable, and (6) that there are no defaults by
Borrower under the Woonsocket Bowling Lease, and which estoppel certificate is
otherwise in form and substance satisfactory to Lender.
Section 8.11 INTENTIONALLY OMITTED.
Section 8.12 RESERVE FUNDS, GENERALLY
(a) No earnings or interest on the Reserve Accounts shall be payable to
Borrower. Neither Lender nor any loan servicer that at any time holds or
maintains the Reserve Accounts shall have any obligation to keep or maintain
such Reserve Accounts or any funds deposited therein in interest-bearing
accounts. If Lender or any such loan servicer elects in its sole and absolute
discretion to keep or maintain any Reserve Account or any funds deposited
therein in an interest-bearing account, (i) such funds shall not be invested
except in Permitted Investments,
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and (ii) except as set forth in Section 8.12(b) hereof, all interest earned or
accrued thereon shall be for the account of and be retained by Lender or such
loan servicer.
(b) Notwithstanding the foregoing, Borrower may elect to earn interest on the
Required Repair Account, Replacement Reserve Account or the Leasing Reserve
Account. If Borrower elects to have such Reserve Accounts earn interest,
Borrower shall pay Lender the fees (the "SERVICING FEES") set forth on Exhibit E
attached hereto for its services in establishing and administering interest
bearing accounts for such Reserve Accounts. Lender may modify the Servicing Fees
from to time. If Borrower has elected to pay and continues to pay the Servicing
Fees, Lender shall pay Borrower interest on such accounts. Lender's obligation
to pay interest on such Reserve Accounts will automatically terminate if
Borrower fails to pay any of the Servicing Fees within five (5) days after the
annual payment date on which the Servicing Fees are due. Lender makes no
representation or warranty as to the rate or amount of interest, if any, which
may accrue on any Reserve Account and Lender shall have no liability in
connection therewith. All such interest shall be and become part of the
applicable Reserve Account and shall be disbursed in accordance with Section 8.5
hereof; provided, however, that Lender may, at its election, retain any such
interest for its own account during the occurrence and continuance of an Event
of Default. Borrower agrees that it shall include all interest on the applicable
Reserve Funds as the income of Borrower (and, if Borrower is a partnership or
other pass-through entity, the partners, members or beneficiaries of Borrower,
as the case may be), and shall be the owner of the Reserve Funds for federal and
applicable state and local tax purposes.
(c) Borrower grants to Lender a first-priority perfected security interest in,
and assigns and pledges to Lender, each of the Reserve Accounts and any and all
Reserve Funds now or hereafter deposited in the Reserve Accounts as additional
security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Accounts and the Reserve Funds shall constitute additional
security for the Debt. The provisions of this Section 8.12 are intended to give
Lender or any subsequent holder of the Loan "control" of the Reserve Accounts
within the meaning of the UCC.
(d) The Reserve Funds shall not constitute escrow or trust funds and may be
commingled with other monies held by Lender.
(e) Borrower shall not, without obtaining the prior written consent of Lender,
further pledge, assign or grant any security interest in the Reserve Accounts or
the Reserve Funds deposited therein or permit any Lien to attach thereto, except
for the security interest granted in this Section 8.12, or any levy to be made
thereon, or any UCC Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto.
ARTICLE 9 - INTENTIONALLY OMITTED
ARTICLE 10 - EVENTS OF DEFAULT; REMEDIES
Section 10.1 EVENT OF DEFAULT
The occurrence of any one or more of the following events shall constitute an
"EVENT OF DEFAULT":
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(a) if any portion of the Debt is not paid prior to the fifth day following the
date the same is due or if the entire Debt is not paid on or before the Maturity
Date;
(b) except as otherwise expressly provided in the Loan Documents, if any of the
Taxes or Other Charges are not paid on or before same become delinquent;
(c) if (i) the Policies are not kept in full force and effect, (ii) insurance
certificates are not delivered to Lender in accordance with Section 7.1 hereof
or (iii) certified copies of the Policies are not delivered to Lender upon
request, provided such copies are available;
(d) if Borrower breaches any covenant with respect to itself or any SPE
Component Entity contained in Article 5 or any covenant contained in Article 6
hereof;
(e) if any representation or warranty of, or with respect to, Borrower,
Guarantor, any SPE Component Entity, or any member, general partner, principal
or beneficial owner of any of the foregoing, made herein, in any other Loan
Document, or in any certificate, report, financial statement or other instrument
or document furnished to Lender at the time of the closing of the Loan or during
the term of the Loan shall have been false or misleading in any material respect
when made;
(f) if (i) Borrower, or any managing member or general partner of Borrower,
Guarantor, or any SPE Component Entity (if any) shall commence any case,
proceeding or other action (A) under any Creditors Rights Laws, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, or (B) seeking appointment of
a receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Borrower, any managing member
or general partner of Borrower, Guarantor, or any SPE Component Entity (if any)
shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against Borrower, any managing member or general partner of
Borrower, Guarantor, or any SPE Component Entity (if any) any case, proceeding
or other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of sixty (60) days;
or (iii) there shall be commenced against Borrower, any managing member or
general partner of Borrower, Guarantor, or any SPE Component Entity (if any) any
case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of any order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (iv) Borrower, any managing
member or general partner of Borrower, Guarantor, or any SPE Component Entity
(if any) shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii),
or (iii) above; or (v) Borrower, any managing member or general partner of
Borrower, Guarantor, or any SPE Component Entity (if any) shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due;
(g) if Borrower shall be in default beyond applicable notice and grace periods
under any other mortgage, deed of trust, deed to secure debt or other security
agreement covering any part of the Property, whether it be superior or junior in
lien to the Security Instrument;
63
(h) if the Property becomes subject to any mechanic's, materialman's or other
Lien (other than a Lien for any Taxes or Other Charges not then due and payable
or any Lien consented to by Lender) and such Lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any member or general
partner of Borrower, Guarantor, or any SPE Component Entity (if any) or the
Property and same is not discharged of record within thirty (30) days after same
is filed;
(j) if any of the assumptions contained in the Insolvency Opinion, or in any
other "non-consolidation" opinion delivered to Lender in connection with the
Loan, or in any other "non-consolidation" delivered subsequent to the closing of
the Loan, is or shall become untrue in any material respect;
(k) if any default occurs under any guaranty or indemnity executed in connection
herewith and such default continues after the expiration of applicable grace
periods, if any; or
(1) if Borrower shall continue to be in default under any other term, covenant
or condition of this Agreement or any of the Loan Documents for more than
fifteen (15) days after notice 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 that if such default
cannot reasonably be cured within such thirty (30) day period and 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 so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of one hundred twenty (120) days,
provided further that if Borrower delivers to Lender reasonably satisfactory
evidence that Borrower is diligently and expeditiously proceeding to cure such
default, Lender shall give Borrower up to an additional thirty (30) day period
to cure such default, it being agreed that the aggregate cure period hereunder
for non-monetary defaults shall in no event exceed one hundred eighty (180)
days.
Section 10.2 REMEDIES
(a) Upon the occurrence of an Event of Default (other than an Event of Default
described in Section 10.1(f) above) and at any time thereafter Lender may, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and in 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 the Property, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in Section 10.1(f) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
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(b) 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 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.
ARTICLE 11 - ENVIRONMENTAL PROVISIONS
Section 11.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, based upon and except as expressly disclosed
in the Environmental Report of the Property and information that Borrower knows
or should reasonably have known, that: (a) there are no Hazardous Materials or
underground storage tanks in, on, or under the Property, except those that are
both (i) in compliance with Environmental Laws and with permits issued pursuant
thereto (if such permits are required), if any, and (ii) either (A) in the case
of Hazardous Materials, in amounts not in excess of that necessary to operate
the Property for the purposes set forth herein or in amounts used by Tenants in
the ordinary course of business, or (B) fully disclosed to and approved by
Lender in writing pursuant to an Environmental Report; (b) there are no past,
present or threatened Releases of Hazardous Materials in violation of any
Environmental Law or which would require remediation by a Governmental Authority
in, on, under or from the Property except as described in the Environmental
Report; (c) there is no threat of any Release of Hazardous Materials migrating
to the Property except as described in the Environmental Report; (d) there is no
past or present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property except as described in the
Environmental Report; (e) Borrower does not know of, and has not received, any
written or oral notice or other communication from any Person relating to
Hazardous Materials in, on, under or from the Property; and (f) Borrower has
truthfully and fully provided to Lender, in writing, any and all information
relating to environmental conditions in, on, under or from the Property known to
Borrower or contained in Borrower's files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from the Property and/or to the environmental condition of the Property.
Section 11.2 ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Borrower owns, manages, is in
possession of, or otherwise controls the operation of the Property: (a) all uses
and operations on or of the Property, whether by Borrower or any other Person,
shall be in compliance with all Environmental Laws and permits issued pursuant
thereto; (b) there shall be no Releases of Hazardous Materials in, on, under or
from the Property; (c) there shall be no Hazardous
65
Materials in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws and with permits issued pursuant thereto,
if and to the extent required, and (ii) (A) in amounts not in excess of that
necessary to operate the Property for the purposes set forth herein or (B) fully
disclosed to and approved by Lender in writing; (d) Borrower shall keep the
Property free and clear of all Environmental Liens; (e) Borrower shall, at its
sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to Section 11.4 below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(#) Borrower shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
the Property, pursuant to any reasonable written request of Lender, upon
Lender's reasonable belief that the Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results thereof,
and Lender and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof; (g) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property; and (ii) comply with any Environmental Law; (h) Borrower shall not
allow any Tenant or other user of the Property to violate any Environmental Law;
(i) Borrower shall immediately notify Lender in writing after it has become
aware of (A) any presence or Release or threatened Release of Hazardous
Materials in, on, under, from or migrating towards the Property; (B) any
non-compliance with any Environmental Laws related in any way to the Property;
(C) any actual or potential Environmental Lien against the Property; (D) any
required or proposed remediation of environmental conditions relating to the
Property; and (E) any written or oral notice or other communication of which
Borrower becomes aware from any source whatsoever (including but not limited to
a Governmental Authority) relating in any way to Hazardous Materials; and (j)
Borrower shall, at its sole cost and expense, continue to operate the onsite
groundwater remediation system in accordance with the Order of Approvals issued
October 3, 2005 by the Rhode Island Department of Environmental Management
("RIDEM") in form and substance satisfactory to the RIDEM and shall and promptly
take any other actions which are necessary in order to cause the RIDEM to issue
a Letter of Compliance for the Property, and shall deliver to Lender a copy of
such Letter of Compliance promptly following Borrower's receipt of same. Any
failure of Borrower to perform its obligations pursuant to this Section 11.2
shall constitute bad faith waste with respect to the Property.
Section 11.3 LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not limited to
any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting other invasive testing.
Borrower shall cooperate with and provide access to Lender and any such person
or entity designated by Lender.
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Section 11.4 OPERATIONS AND MAINTENANCE PROGRAMS
Borrower shall establish and comply with that certain operations and maintenance
program prepared by Lender's environmental consultant with respect to the
Property, in form and substance reasonably acceptable to Lender, prepared by an
environmental consultant reasonably acceptable to Lender, which program shall
address any asbestos-containing material or lead based paint that may now or in
the future be detected at or on the Property. Without limiting the generality of
the preceding sentence, Lender may require (a) periodic notices or reports to
Lender in form, substance and at such intervals as Lender may specify, (b) an
amendment to such operations and maintenance program to address changing
circumstances, laws or other matters, (c) at Borrower's sole expense,
supplemental examination of the Property by consultants specified by Lender, (d)
access to the Property by Lender, its agents or servicer, to review and assess
the environmental condition of the Property and Borrower's compliance with any
operations and maintenance program, and (e) variation of the operations and
maintenance program in response to the reports provided by any such consultants.
ARTICLE 12 - SECONDARY MARKET
Section 12.1 TRANSFER OF LOAN
Lender may, at any time, sell, transfer or assign the Loan Documents, or grant
participations therein ("PARTICIPATIONS") or syndicate the Loan ("SYNDICATION")
or issue mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
("SECURITIES") (a Syndication or the issuance of Participations and/or
Securities, a "SECURITIZATION").
Section 12.2 DELEGATION OF SERVICING
At the option of Lender, the Loan may be serviced by a servicer/trustee selected
by Lender and Lender may delegate all or any portion of its responsibilities
under this Agreement and the other Loan Documents to such servicer/trustee
pursuant to a servicing agreement between Lender and such servicer/trustee.
Section 12.3 DISSEMINATION OF INFORMATION
Lender may forward to each purchaser, transferee, assignee, or servicer of, and
each participant, or investor in, the Loan, or any Participations and/or
Securities or any of their respective successors (collectively, the "INVESTOR")
or any Rating Agency rating the Loan, or any Participations and/or Securities,
each prospective Investor, and any organization maintaining databases on the
underwriting and performance of commercial mortgage loans, all documents and
information which Lender now has or may hereafter acquire relating to the Debt
and to Borrower, any managing member or general partner thereof, Guarantor, any
SPE Component Entity (if any) and the Property, including financial statements,
whether furnished by Borrower or otherwise, as Lender determines necessary or
desirable. Borrower irrevocably waives any and all rights it may have under
applicable Legal Requirements to prohibit such disclosure, including but not
limited to any right of privacy.
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Section 12.4 COOPERATION
At the request of the holder of the Note and, to the extent not already required
to be provided by Borrower under this Agreement, Borrower and Guarantor, at no
expense to Borrower or Guarantor (other than Borrower's or Guarantor's
attorneys' fees and costs), agree to provide information and to otherwise
cooperate in order to satisfy the market standards to which the holder of the
Note customarily adheres or which may be reasonably required in the marketplace
or by the Rating Agencies in connection with a Securitization or the sale of the
Note or the Participations or Securities, including, without limitation, to:
(a) (i) provide such financial and other information with respect to the
Property, Borrower, Guarantor and Manager, (ii) provide budgets relating to the
Property and (iii) to perform or permit or cause to be performed or permitted
such site inspection, appraisals, market studies, environmental reviews and
reports (Phase I's and, if appropriate, Phase II's), engineering reports and
other due diligence investigations of the Property, as may be reasonably
requested by the holder of the Note or the Rating Agencies or as may be
necessary or appropriate in connection with the Securitization (the "PROVIDED
INFORMATION"), together, if customary, with appropriate verifications and/or
consents of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) if required by the Rating Agencies, deliver at Lender's expense (provided
Borrower and Guarantor shall pay all of their attorneys' fees and costs) (i) a
revised Insolvency Opinion, (ii) revised opinions of counsel as to due execution
and enforceability with respect to the Property, Borrower, Guarantor, SPE
Component Entity and their respective Affiliates and the Loan Documents, and
(iii) revised organizational documents for Borrower, Guarantor and SPE Component
Entity and their respective Affiliates (including, without limitation, such
revisions as are necessary to comply with the provisions of Section 5.1 hereof),
which counsel, opinions and organizational documents shall be satisfactory to
Lender and the Rating Agencies;
(c) if required by the Rating Agencies, deliver such additional tenant estoppel
letters, subordination, non-disturbance and attornment agreements or other
agreements from parties to agreements that affect the Property, which estoppel
letters, subordination, non-disturbance and attornment agreements or other
agreements shall be satisfactory to Lender and the Rating Agencies; provided,
however, that Borrower shall only be required to deliver such documents (i) with
respect to new Tenants which are not in place as of the date hereof and/or (ii)
if such requirement from the Rating Agencies occurs after 6 months from the date
hereof.
(d) execute such amendments to the Loan Documents and organizational documents
as may be requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (except for modifications and amendments required to be made
pursuant to Section (e) below,) (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material economic term of the Loan.
(e) if Lender elects, in its sole discretion, prior to or upon a Securitization,
to split the Loan into two or more parts, or the Note into multiple component
notes or tranches which may
68
have different interest rates, amortization payments, principal amounts, payment
priorities, and maturities, Borrower and Guarantor agree to cooperate with
Lender in connection with the foregoing and to execute the required
modifications and amendments to the Note, this Agreement and the Loan Documents
and to provide opinions necessary to effectuate the same. Such Notes or
components may be assigned different interest rates, so long as the initial
weighted average of such interest rates does not exceed the Interest Rate and
the scheduled amortization payments do not exceed the total scheduled
amortization payments required under the Note;
(f) make such representations and warranties as of the closing date of the
Securitization with respect to the Property, Borrower, Guarantor and the Loan
Documents as are customarily provided in securitization transactions and as may
be reasonably requested by the holder of the Note 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; and
(g) supply to Lender such documentation, financial statements and reports in
form and substance required for Lender to comply with Regulation S-X of the
federal securities law, if applicable.
All third party costs and expenses incurred by Lender, Borrower or Guarantor in
connection with Borrower's or Guarantor's complying with requests made under
this Section 12.4 shall be paid by Lender (except that Borrower and Guarantor
shall pay for their own attorneys' fees and costs).
In the event that Borrower requests any consent or approval hereunder and the
provisions of this Agreement or any Loan Documents require a Ratings
Confirmation from each Rating Agency with respect to the rating on the
Securities, or, in accordance with the terms of the transaction documents
relating to a Securitization, Borrower shall pay all of the costs and expenses
of Lender, Lender's servicer and each Rating Agency in connection therewith,
and, if applicable, shall pay any fees imposed by any Rating Agency as a
condition to the delivery of such Ratings Confirmation.
Section 12.5 INTENTIONALLY OMITTED.
ARTICLE 13 - INDEMNIFICATIONS
Section 13.1 GENERAL INDEMNIFICATION
Borrower shall indemnify, defend and hold harmless the Indemnified Parties from
and against any and all Losses imposed upon or incurred by or asserted against
any Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following: (a) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (b) any use, nonuse or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent
69
property or adjacent parking areas, streets or ways; (c) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (d) any failure of the Property to
be in compliance with any applicable Legal Requirements; (e) any and all claims
and demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants, or agreements contained in any Lease; (f) the holding or
investing of the Reserve Accounts provided same are held in Permitted
Investments or the performance of the Required Work, or (g) the payment of any
commission, charge or brokerage fee to anyone which may be payable in connection
with the funding 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.
Section 13.2 MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any tax on
the making and/or recording of the Security Instrument, the Note or any of the
other Loan Documents, but excluding any income, franchise or other similar
taxes.
Section 13.3 ERISA INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses (including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender's sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under Section 3.9 or Section 4.18 of this
Agreement.
Section 13.4 ENVIRONMENTAL INDEMNITY
Simultaneously with this Loan Agreement, Borrower and Guarantor have executed
and delivered the Environmental Indemnity, the obligations under which are not
part of the Debt and are not secured by the Security Instrument.
Section 13.5 Survival
The obligations and liabilities of Borrower under this Article 13 shall fully
survive indefinitely notwithstanding any termination, satisfaction, assignment,
entry of a judgment of foreclosure, exercise of any power of sale, or delivery
of a deed in lieu of foreclosure of the Security Instrument.
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ARTICLE 14 - EXCULPATION
Section 14.1 EXCULPATION
(a) Except as otherwise provided herein or in the other Loan Documents, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained herein or in 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, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Agreement, the Note, the Security Instrument and
the other Loan Documents, and the interest in the Property, the Rents and any
other collateral given to Lender created by this Agreement, the Note, the
Security Instrument and the other Loan Documents; provided, however, that 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. Lender, by accepting this Agreement, the
Note, the Security Instrument and the other Loan Documents, agrees that it shall
not, except as otherwise provided in this Section 14.1, 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 this Agreement, the Note, the
Security Instrument or the other Loan Documents. The provisions of this Section
14.1 shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by this Agreement, the Note, the Security
Instrument or the other Loan Documents; (ii) impair the right of Lender to name
Borrower or Guarantor as a party defendant in any action or suit for judicial
foreclosure and sale under this Agreement and the Security Instrument; (iii)
affect the validity or enforceability of any indemnity (including, without
limitation, those contained in the Environmental Indemnity and Article 13 of
this Agreement), guaranty (including, without limitation, the Guaranty), master
lease or similar instrument made in connection with this Agreement, the Note,
the Security Instrument and the other Loan Documents; (iv) impair the right of
Lender to obtain the appointment of a receiver; (v) impair the enforcement of
the assignment of leases provisions contained in the Security Instrument; or
(vi) impair the right of Lender to obtain a deficiency judgment or other
judgment on the Note against Borrower if necessary to obtain any Insurance
Proceeds or Awards to which Lender would otherwise be entitled under this
Agreement; provided however, Lender shall only enforce such judgment to the
extent of the Insurance Proceeds and/or Awards.
(b) Notwithstanding the provisions of this Section 14.1 to the contrary,
Borrower shall be personally liable to Lender for Losses due to:
(i) fraud or intentional misrepresentation by Borrower, Guarantor or any other
Affiliate of Borrower or Guarantor in connection with the execution and the
delivery of this Agreement, the Note, the Security Instrument, any of the other
Loan Documents, or any certificate, report, financial statement or other
instrument or document furnished to Lender in connection with the application
for or the underwriting of the Loan or furnished to Lender at the time of the
closing of the Loan or during the term of the Loan;
(ii) Borrower's misapplication or misappropriation of Rents received by Borrower
after the occurrence of an Event of Default;
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(iii) Borrower's misapplication or misappropriation of tenant security deposits
or Rents collected in advance;
(iv) the misapplication or the misappropriation of Insurance Proceeds or Awards;
(v) Borrower's failure to pay Taxes, Other Charges (except to the extent that
sums sufficient to pay such amounts have been deposited in escrow with Lender
pursuant to the terms hereof and there exists no impediment to Lender's
utilization thereof), charges for labor or materials or other charges that can
create liens on the Property beyond any applicable notice and cure periods
specified herein;
(vi) Borrower's failure to return or to reimburse Lender for all Personal
Property taken from the Property by or on behalf of Borrower and not replaced
with Personal Property of the same utility and of the same or greater value;
(vii) any act of physical waste or arson by Borrower, any principal, Affiliate,
member or general partner thereof or by Guarantor, any principal, Affiliate,
member or general partner thereof;
(viii) Borrower's gross negligence or willful misconduct;
(ix) Borrower's failure following any Event of Default to deliver to Lender upon
demand all Rents and books and records relating to the Property;
(ii) any termination or impairment of the Utility Easement.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect and the Debt shall be fully
recourse to Borrower in the event (i) of a breach by Borrower or any SPE
Component Entity of any of the covenants set forth in Article 5 or Article 6
hereof, (ii) the Property or any part thereof shall become an asset in a
voluntary bankruptcy or insolvency proceeding of Borrower, (iii) Borrower,
Guarantor or any Affiliate, officer, director, or representative which controls,
directly or indirectly, Borrower or Guarantor files, or joins in the filing of,
an involuntary petition against Borrower under any Creditors Rights Laws, or
solicits or causes to be solicited petitioning creditors for any involuntary
petition against Borrower from any Person; (iv) Borrower files an answer
consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under any Creditors Rights Laws, or
solicits or causes to be solicited petitioning creditors for any involuntary
petition from any Person; or (v) any Affiliate, officer, director, or
representative which controls Borrower consents to or acquiesces in or joins in
an application for the appointment of a custodian, receiver, trustee, or
examiner for Borrower or any portion of the Property.
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(i) hereof; or a breach by Borrower of any of the covenants set forth in Section
4.11
(d) Nothing herein shall be deemed to be a waiver of any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provision of the U.S.
Bankruptcy Code to file a claim for the full amount of the indebtedness secured
by the Security Instrument or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Security Instrument or the other Loan Documents.
ARTICLE 15 - NOTICES
Section 15.1 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, (b) expedited prepaid
overnight delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, or by (c) telecopier (with answer back
acknowledged provided an additional notice is given pursuant to subsection (b)
above), 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: Merrill Lynch Mortgage Lending, Inc. 4 World Financial Center,
16th Floor New York, New York 10080 Attention: George H. Kok Telephone: (212)
449-4893 Facsimile: (212) 449-3658
With a copy to: Winston & Strawn LLP
200 Park Avenue
New York, New York 10166
Attention: David Traitel, Esq.
Telephone No.: (212) 294-6683
If to Borrower: RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP
c/o Acadia Realty Trust 1311
Mamaroneck Avenue White Plains,
New York 10605
Attention: Robert Masters, Esq.
Telephone No.: (914) 288-8139
Facsimile No.: (914) 288-2139
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.
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ARTICLE 16 - FURTHER ASSURANCES
Section 16.1 REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender or Lender's servicer as to
the loss, theft, destruction or mutilation of the Note or any other Loan
Document which is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Note or other Loan Document, Borrower
will issue, in lieu thereof, a replacement Note or other Loan Document, dated
the date of such lost, stolen, destroyed or mutilated Note or other Loan
Document in the same principal amount thereof and otherwise of like tenor.
Section 16.2 RECORDING OF MORTGAGE, ETC.
Borrower forthwith upon the execution and delivery of the Security Instrument
and thereafter, from time to time, will cause the Security Instrument and any of
the other Loan Documents creating a lien or security interest or evidencing the
lien hereof upon the Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect and perfect the lien or security interest hereof upon, and the interest
of Lender in, the Property. Borrower will pay all taxes, filing, registration or
recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, the Security Instrument, the other
Loan Documents, any note, deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property and any instrument of further
assurance, and any modification or amendment of the foregoing documents, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of the
Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.
Section 16.3 FURTHER ACTS, ETC.
Borrower will, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every further acts, deeds, conveyances,
deeds of trust, mortgages, assignments, security agreements, control agreements,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Agreement or for filing, registering or recording the Security
Instrument, or for complying with all Legal Requirements. Borrower, on demand,
will execute and deliver, and in the event it shall fail to so execute and
deliver, hereby authorizes Lender to execute in the name of Borrower or without
the signature of Borrower to the extent Lender may lawfully do so, one or more
financing statements and financing statement amendments to evidence more
effectively, perfect and maintain the priority of the security interest of
Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney
74
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to Lender at law and in equity, including
without limitation, such rights and remedies available to Lender pursuant to
this Section 16.3.
Section 16.4 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
(a) If any law is enacted or adopted or amended after the date of this Agreement
which deducts the Debt from the value of the Property for the purpose of
taxation or which imposes a tax, either directly or indirectly, on the Debt or
Lender's interest in the Property, Borrower will pay the tax, with interest and
penalties thereon, if any. If Lender is advised by counsel chosen by it that the
payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (120) days to
declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Taxes or Other Charges assessed against
the Property, or any part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Property, or any part thereof, for real
estate tax purposes by reason of the Security Instrument or the Debt. If such
claim, credit or deduction shall be required by law, Lender shall have the
option, by written notice of not less than one hundred twenty (120) days, to
declare the Debt immediately due and payable.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Security Instrument, or any of the other Loan Documents
or impose any other tax or charge on the same, Borrower will pay for the same,
with interest and penalties thereon, if any.
Section 16.5 EXPENSES
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, actual attorneys' fees and disbursements and the
allocated costs of internal legal services and all actual disbursements of
internal counsel) reasonably incurred by Lender in accordance with this
Agreement in connection with (a) 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); (b) 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;
(c) following a request by Borrower, 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; (d) the negotiation, preparation, execution, delivery and administration
of any consents, amendments, waivers or other modifications to this Agreement
75
and the other Loan Documents and any other documents or matters requested by
Lender; (e) securing Borrower's compliance with any requests made pursuant to
the provisions of this Agreement; (f) 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; (g) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action
or proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; and (h) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Property or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, 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.
ARTICLE 17 - WAIVERS
Section 17.1 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.
Section 17.2 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 17.3 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,
76
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 17.4 TRIAL BY JURY
BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. EACH OF LENDER AND BORROWER IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY BORROWER AND LENDER.
Section 17.5 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 17.6 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. Lender agrees that, in
such event, it shall cooperate in expediting any action seeking injunctive
relief or declaratory judgment.
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Section 17.7 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 17.8 WAIVER OF STATUTE OF LIMITATIONS
Borrower hereby expressly waives and releases, to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt or performance of its other obligations under the Loan Documents.
Section 17.9 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.
ARTICLE 18 - GOVERNING LAW
Section 18.1 GOVERNING LAW
This Agreement shall be governed, construed, applied and enforced in accordance
with the laws of the state where the Property is located and applicable laws of
the United States of America.
Section 18.2 SEVERABILITY
Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
Section 18.3 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 Creditors Rights
Laws, 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
78
revived and continue in full force and effect, as if such payment or proceeds
had not been received by Lender.
ARTICLE 19 - MISCELLANEOUS
Section 19.1 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 19.2 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 19.3 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 19.4 SCHEDULES AND EXHIBITS INCORPORATED
The Schedules and Exhibits 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 19.5 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 19.6 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.
(c) The general partners, members, principals and (if Borrower is a trust)
beneficial owners of Borrower are experienced in the ownership and operation of
properties similar to the Property, and Borrower and Lender are relying solely
upon such expertise and business plan in connection with the ownership and
operation of the Property. Borrower is not relying on Lender's expertise,
business acumen or advice in connection with the Property.
(d) Notwithstanding anything to the contrary contained herein, Lender is not
undertaking the performance of (i) any obligations under the Leases; or (ii) any
obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(e) By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Lender pursuant to this Agreement, the Security
Instrument, the Note or the other Loan Documents, including, without limitation,
any officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this Agreement, the
Note, the Security Instrument and the other Loan Documents, Lender is expressly
and primarily relying on the truth and accuracy of the representations and
warranties set forth in Article 3 of this Agreement without any obligation to
investigate the Property and notwithstanding any investigation of the Property
by Lender; that such reliance existed on the part of Lender prior to the date
hereof, that the warranties and representations are a material inducement to
Lender in making the Loan; and that Lender would not be willing to make the Loan
and accept this
80
Agreement, the Note, the Security Instrument and the other Loan Documents in the
absence of the warranties and representations as set forth in Article 3 of this
Agreement.
Section 19.7 Publicity
All news releases, publicity or advertising, except as required by law, by
Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan, Lender or any of its Affiliates shall be
subject to the prior written approval of Lender, not to be unreasonably
withheld. Lender shall be permitted to make any news, releases, publicity or
advertising by Lender or its Affiliates through any media intended to reach the
general public which refers to the Loan, the Property, Borrower, Guarantor and
their respective Affiliates without the approval of Borrower or any such
Persons. Borrower also agrees that Lender may share any information pertaining
to the Loan with its Affiliates in connection with the sale or transfer of the
Loan or any Participations and/or Securities created.
Section 19.8 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 19.9 DUPLICATE ORIGINALS; COUNTERPARTS.
This Loan Agreement and each of the other Loan Documents may be executed in any
number of duplicate originals, and each duplicate original shall be deemed to be
an original. This Loan Agreement and each of the other Loan Documents (and each
duplicate original) also may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together constitute a fully
executed agreement even though all signatures do not appear on the same
document.
Section 19.10 ENTIRE AGREEMENT
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
81
prior agreements among or between such parties, whether oral or written between
Borrower and Lender are superseded by the terms of this Agreement and the other
Loan Documents.
[NO FURTHER TEXT ON THIS PAGE]
82
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.
BORROWER;
RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Acadia Walnut Hill LLC,
-----------------------------------------
a Delaware limited liability company, its
general
By;
-------------------------------------
Name: Robert Masters
Title: Senior Vice President
__ partner
/s/ Illegible
---------------------------------------------
WITH RESPECT TO SECTIONS 12.4 and 12.5 ONLY:
GUARANTOR:
ACACIA REALTY LIMITED PARTNERSHIP a Delaware limited partnership
By:
-----------------------------
Name: Robert Masters
Title: Senior Vice President
By:
-----------------------------------------
a Maryland and real estate investment trust,
/s/ Illegible
---------------------------------------------
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation
By:
-----------------------------
Name:
Title:
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.
BORROWER:
RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Acadia Walnut Hill LLC,
-----------------------------------------
a Delaware limited liability company, its
general partner
By:
-------------------------------------
Name: Robert Masters
Title: Senior Vice President
WITH RESPECT TO SECTIONS 12.4 and 12.5 ONLY:
GUARANTOR:
ACADIA REALTY LIMITED PARTNERSHIP a Delaware limited partnership
By: Acadia Realty Trust,
-----------------------------
a Maryland real estate investment
trust, its general partner
By:
-----------------------------
Name: Robert Masters
Title: Senior Vice President
LENDER:
MERRILL LYNCH MORTGAGE LENDING, INC., a Delaware corporation
By:
-----------------------------------------
Title: __________
/s/ Illegible
---------------------------------------------
Illegible
PRESIDENT
EXHIBIT A
Borrower Equity Ownership Structure
RD Woonsocket Associates Limited Partnership,
a Delaware limited partnership
Acadia Walnut Hill LLC,
a Delaware limited liability company
1% GENERAL PARTNER 99% [.Invited Partner
100% 99% General Partner 1% Limited Partners
Acadia Realty Limited Partnership,
a Delaware limited partnership
Acadia Realty Limited Partnership,
a Delaware limited partnership
Acadia Realty Trust,
a Maryland real estate
investment trust
Various Investors
99% General Partner 1% Limited Partners
Acadia Realty Trust,
a Maryland real estate
investment trust
Various Investors
EXHIBIT B
Intentionally Omitted
EXHIBIT C
SUMMARY OF RESERVES
Initial Deposit Monthly Deposit Interest Paid to
Reserve Items Amount Amount Borrower?
- ----------------------------- --------------- --------------- ----------------
Taxes $92,901.39 $46,450.69 Not Available
(as of the
date hereof)
Insurance Premiums Not Applicable Not Applicable Not Available
Required Repairs $99,750.00 Not Applicable
Replacements Not Applicable $17,030.00 Yes
$14,114.00
$3,697
ADD OTHER APPLICABLE RESERVES $ $
Initial Debt Service $184,49153 Not Applicable Not Available
Woonsocket Bowling $35,984.00 Not Applicable --
Conditionally waived in accordance with Section 8.6 hereof. Conditionally waived
in accordance with Section 8.6 hereof.
(3) Amount payable on the Scheduled Payment Date in November, 2006 through and
including the Scheduled Payment Date in October, 2008.
a Amount payable on the Scheduled Payment Date in November, 2008 through and
including the Scheduled Payment Date in October, 2010.
(5) Amount payable on the Scheduled Payment Date in November, 2010 and each
Scheduled Payment Date thereafter during the term of the Loan.
Reserve
EXHIBIT D
Required Repairs
(Attached)
TABLE 1- IMMEDIATE REPAIRS & SHORT TERM REPAIRS
Walnut Hill
1500 Diamond Hill Road Woonsocket, Rhode Island EBI Project # 11064188
__________________
RECOMMENDED Consulting Consulting Consulting
____Consulting 2 WORK a N,a 2U ____ Consulting ________
- --------------- --------------- ----------------- ----------- ---------- ----------- ----------- ---------- --------
SITE CONDITIONS
Z1 Tope. None
2.2 Prai/Pkg. None
2,3 Anomie, Repair concrete per
sidewalks 500 $ 6.00 squarefoot $ 3.000
23 Amenities Repair trip
hazards 12 $ 150.00 each $ 1,600
2,4 Utilities Menu
31 Subtract None
3.2 Superstruct None
3,3 Facades Repairs to
concrete block 1 520,000.00 lump sum $20,000
Repairs to
3.3 F--D-- stucco (arcade 1 $25,000.00 lump sum $25,000
3.4 Reel Investigate and
repair roof leeks 6 $ 5,000.00 lump sum $30,000
3.5 Bsmt/Attic None
3,6 ADA None
3.7 Interior F & C Complete bowling
alley renovation 1 $ 0.00 action Item $ 0 -_
4.1 Plumbing None
4.2 HVAC None
4.3 tkclrk None
4.4 F/L Safety None -_
4.5 Elevators None
MATERIAL CODE VIOLATIONS
5.0 Codes None
TOTAL $79,000 SO
1.25 MULTIPLIER $99,750
TOTAL DEFERRED MAINTENANCE
PROPERTY AND LOAN INFORMATION
Building Area 297,922 Property Age 40 yr. No. of Floors 1 Survey Date 8115106
Tenants or Units 27 Property Type Retail No. of Buildings 3 Report Data 8123106
EBI Consulting
Exhibit 1
EXHIBIT E
Servicing Fees
INTEREST BEARING ACCOUNTS
(Not Available for Taxes and Insurance Reserve Account, the Initial Debt Service
Reserve Account and Debt Service Reserve Account)
Interest Non-InterestBearing
Type of Fee Bearing Accounts Accounts
- ---------------------------- --------------------- ---------------------
SET Up FEE - per account: $250.00 Waived
MAINTENANCE FEE -
commencing in the secondyear
and annually thereafter: $200.00 Waived
Four "no Four "no
charge" disbursements charge" disbursements
in any one calendar in any one calendar
year; $50.00 year; $50.00
per request per request
thereafter thereafter
NOTE: The above schedule does not include 3rd party charges, which will be
passed through on a dollar-for-dollar basis.
PROMISSORY NOTE
$23,500,000.00 September 2006
FOR VALUE RECEIVED RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP, a Delaware
limited partnership, having its principal place of business at c/o Acadia Realty
Trust, 1311 Mamaroneck Avenue, White Plains, New York 10605 ('BORROWER"), hereby
unconditionally promises to pay to the order of MERRILL LYNCH MORTGAGE LENDING,
INC., a Delaware corporation, as lender, having an address at 4 World Financial
Center, 16th floor, New York, New York 10080 ("LENDER"), or at such other place
as the holder hereof may from time to time designate in writing, the principal
sum of TWENTY THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($23,500,000.00), in lawful
money of the United States of America with interest thereon to be computed from
the date of this Note at the rate set forth in, and to be paid in accordance
with the terms of, this Note and that certain Loan Agreement dated the date
hereof between Borrower and Lender (as the same may be amended, restated,
replaced, supplemented and modified from time to time, the "LOAN AGREEMENT").
All capitalized terms not defined herein shall have the respective meanings set
forth in the Loan Agreement.
ARTICLE 1 - PAYMENT TERMS
Borrower agrees to pay the principal sum of this Note and interest on the
unpaid principal sum of this Note from time to time outstanding at the rate and
at the times specified in Article 2 of the Loan Agreement. The outstanding
balance of the principal sum of this Note and all accrued and unpaid interest
thereon shall be due and payable on the Maturity Date.
ARTICLE 2 - DEFAULT AND ACCELERATION
The Debt shall without notice become immediately due and payable at the
option of Lender if any payment required in this Note is not paid on or prior to
the date when due (subject to any applicable grace or cure period set forth in
the Loan Agreement) or if not paid on the Maturity Date or on the happening of
any other Event of Default.
ARTICLE 3 - LOAN DOCUMENTS
This Note is secured by the Security Instrument and the other Loan
Documents. All of the terms, covenants and conditions contained in the Loan
Agreement, the Security Instrument and the other Loan Documents are hereby made
part of this Note to the same extent and with the same force as if they were
fully set forth herein. In the event of a conflict or inconsistency between the
terms of this Note and the Loan Agreement, the terms and provisions of the Loan
Agreement shall govern.
ARTICLE 4 - SAVINGS CLAUSE
Notwithstanding anything to the contrary, (a) all agreements and
communications between Borrower and Lender are hereby and shall automatically be
limited so that, after taking
into account all amounts deemed interest, the interest contracted for, charged
or received by Lender shall never exceed the maximum lawful rate or amount, (b)
in calculating whether any interest exceeds the lawful maximum, all such
interest shall be amortized, prorated, allocated and spread over the full amount
and term of all principal indebtedness of Borrower to Lender, and (c) if through
any contingency or event, Lender receives or is deemed to receive interest in
excess of the lawful maximum, any such excess shall be deemed to have been
applied toward payment of the principal of any and all then outstanding
indebtedness of Borrower to Lender.
ARTICLE 5 - NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
ARTICLE 6 -- WAIVERS
Borrower and all others who may become liable for the payment of all or any
part of the Debt do hereby severally waive presentment and demand for payment,
notice of dishonor, notice of intention to accelerate, notice of acceleration,
protest and notice of protest and non-payment and all other notices of any kind
except as provided in the Loan Agreement. No release of any security for the
Debt or extension of time for payment of this Note or any installment hereof,
and no alteration, amendment or waiver of any provision of this Note, the Loan
Agreement or the other Loan Documents made by agreement between Lender or any
other Person shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, and any other Person who may
become liable for the payment of all or any part of the Debt, under this Note,
the Loan Agreement or the other Loan Documents. No notice to or demand on
Borrower shall be deemed to be a waiver of the obligation of Borrower or of the
right of Lender to take further action without further notice or demand as
provided for in this Note, the Loan Agreement or the other Loan Documents. If
Borrower is a limited liability company, the agreements herein contained shall
remain in force and be applicable, notwithstanding any changes in the
individuals comprising the limited liability company, and the term "Borrower,"
as used herein, shall include any alternate or successor limited liability
company, but any predecessor limited liability company and its members shall not
thereby be released from any liability. If Borrower is a partnership, the
agreements herein contained shall remain in force and be applicable,
notwithstanding any changes in the individuals comprising the partnership, and
the term "Borrower," as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and their partners shall not
thereby be released from any liability. If Borrower is a corporation, the
agreements contained herein shall remain in full force and be applicable
notwithstanding any changes in the shareholders comprising, or the officers and
directors relating to, the corporation, and the term "Borrower" as used herein,
shall include any alternative or successor corporation, but any predecessor
corporation shall not be relieved of liability hereunder. Nothing in this
paragraph shall be construed as a consent to, or a waiver of, any prohibition or
restriction on transfers of interests in such borrowing entity which may be set
forth in the Loan Agreement, the Security Instrument or any other Loan
Documents. If Borrower consists of more than one person or party, the
obligations and liabilities of each person or party shall be joint and several.
ARTICLE 7 - TRANSFER
Upon the transfer of this Note, Borrower hereby waiving notice of any such
transfer, Lender may deliver all the collateral mortgaged, granted, pledged or
assigned pursuant to the Loan Documents, or any part thereof, to the transferee
who shall thereupon become vested with all the rights herein or under applicable
law given to Lender with respect thereto, and Lender shall thereafter forever be
relieved and fully discharged from any liability or responsibility in the matter
arising from events thereafter occurring; but Lender shall retain all rights
hereby given to it with respect to any liabilities and the collateral not so
transferred.
ARTICLE 8 - EXCULPATION
The provisions of Article 14 of the Loan Agreement are hereby incorporated
by reference into this Note to the same extent and with the same force as if
fully set forth herein.
ARTICLE 9 - GOVERNING LAW
This Note shall be governed, construed, applied and enforced in accordance
with the laws of the state where the Property is located and applicable laws of
the United States of America.
ARTICLE 10 - NOTICES
All notices or other written communications hereunder shall be delivered in
accordance with Section 15.1 of the Loan Agreement.
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and
year first above written.
BORROWER:
RD WOONSOCKET ASSOCIATES LIMITED
PARTNERSHIP,
a Delaware limited partnership
By: /s/ Illegible
-----------------------------------
Acadia Walnut Hill LLC,
a Delaware limited liability company,
its ________________
-----------------------------------
Name: Robert __ ________
Title: Senior Vice President
STATE OF
COUNTY __________
In ~________~________ in said County, on the (p(101) day of _________ , __ 2006
before me personally appeared the within-named Robert Masters, to me known and
known by me to be the Senior Vice President of ACADIA WALNUT HILL LLC, a
Delaware limited liability company, the general partner of RD WOONSOCKET
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, and the person
executing these presents on behalf of ACADIA WALNUT HILL LLC, and RD WOONSOCKET
ASSOCIATES LIMITED PARTNERSHIP, and he acknowledged said instrument by him so
executed to be his free act and deed in such capacity, and the free act and deed
of ACADIA WALNUT HILL LLC and RD WOONSOCKET ASSOCIATES LIMITED PARTNERSHIP.
______________________________________ DEBRA LEIBLER-JONES
Notary Public NOTARY PUBLIC, ST: OF NY
Print Name: COMMISSION EXP D1 RW J