Exhibit 10.371
LOAN AGREEMENT
Dated as of October 8, 2004
Between
INLAND WESTERN DALLAS LINCOLN PARK LIMITED PARTNERSHIP,
as Borrower
and
LASALLE BANK NATIONAL ASSOCIATION,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION....................................................1
Section 1.1 Definitions................................................................................1
Section 1.2 Principles of Construction................................................................18
ARTICLE II GENERAL TERMS.............................................................................19
Section 2.1 Loan Commitment; Disbursement to Borrower.................................................19
Section 2.2 Interest; Loan Payments; Late Payment Charge..............................................19
Section 2.3 Prepayments...........................................................:...................21
Section 2.4 Intentionally Omitted.....................................................................23
Section 2.5 Release of Property.......................................................................23
Section 2.6 Manner of Making Payments.................................................................23
Section 2.7 Intentionally Omitted.....................................................................24
ARTICLE III CONDITIONS PRECEDENT......................................................................24
Section 3.1 Conditions Precedent to Closing...........................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................28
Section 4.1 Borrower Representations..................................................................28
Section 4.2 Survival of Representations...............................................................36
ARTICLE V BORROWER COVENANTS........................................................................36
Section 5.1 Affirmative Covenants.....................................................................36
Section 5.2 Negative Covenants........................................................................44
ARTICLE VI INSURANCE; CASUALTY; CONDEMNATION.........................................................49
Section 6.1 Insurance.................................................................................49
Section 6.2 Casualty..................................................................................53
Section 6.3 Condemnation..............................................'...............................53
Section 6.4 Restoration...............................................................................53
ARTICLE VII RESERVE FUNDS.............................................................................58
Section 7.1 Required Repair Funds.....................................................................58
Section 7.2 Tax and Insurance Escrow Fund.............................................................60
Section 7.3 Replacements and Replacement Reserve......................................................61
Section 7.4 Intentionally Omitted.....................................................................65
Section 7.5 Intentionally Omitted.....................................................................66
Section 7.6 Intentionally Omitted.....................................................................66
Section 7.7 Reserve Funds, Generally..................................................................66
ARTICLE VIII DEFAULTS..................................................................................66
Section 8.1 Event of Default..........................................................................66
Section 8.2 Remedies..................................................................................68
Section 8.3 Remedies Cumulative; Waivers..............................................................69
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ARTICLE IX SPECIAL PROVISIONS........................................................................70
Section 9.1 Sale of Notes and Securitization..........................................................70
Section 9.2 Securitization............................................................................71
Section 9.3 Rating Surveillance.......................................................................71
Section 9.4 Exculpation...............................................................................71
Section 9.5 Termination of Manager....................................................................73
Section 9.6 Servicer..................................................................................73
Section 9.7 Splitting the Loan........................................................................73
ARTICLE X MISCELLANEOUS.............................................................................74
Section 10.1 Survival..................................................................................74
Section 10.2 Lender's Discretion.......................................................................74
Section 10.3 Governing Law.............................................................................74
Section ]0.4 Modification, Waiver in Writing...........................................................74
Section 10.5 Delay Not a Waiver........................................................................75
Section 10.6 Notices...................................................................................75
Section 10.7 Trial by Jury.............................................................................76
Section 10.8 Headings..................................................................................77
Section 10.9 Severability..............................................................................77
Section 10.10 Preferences...............................................................................77
Section 10.11 Waiver of Notice..........................................................................77
Section 10.12 Remedies of Borrower......................................................................77
Section 10.13 Expenses; Indemnity.......................................................................78
Section 10.14 Schedules Incorporated....................................................................79
Section 10.15 Offsets, Counterclaims and Defenses.......................................................79
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries.............................79
Section 10.17 Publicity.................................................................................80
Section 10.18 Waiver of Marshalling of Assets...........................................................80
Section 10.19 Waiver of Counterclaim....................................................................80
Section 10.20 Conflict; Construction of Documents; Reliance.............................................80
Section 10.21 BROKERS AND FINANCIAL ADVISORS............................................................80
Section 10.22 Prior Agreements..........................................................................81
Section 10.23 Sale of Loan..............................................................................81
Section 10.24 Joint and Several Liability...............................................................81
SCHEDULES
Schedule I - Intentionally Omitted
Schedule II - Intentionally Omitted
Schedule III - Required Repairs
Schedule IV - Rent Roll
Schedule V - Intentionally Omitted
Schedule VI - Intentionally Omitted
Schedule VII - Intentionally Omitted
Schedule VIII - Intentionally Omitted
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Schedule IX - Intentionally Omitted
Schedule X - Other Contract Funds Agreements
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LOAN AGREEMENT
THIS
LOAN AGREEMENT, dated as of this 8 day of October, 2004 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between LASALLE BANK NATIONAL ASSOCIATION, a national
banking association, having an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LENDER"), and INLAND WESTERN DALLAS LINCOLN PARK
LIMITED PARTNERSHIP, an
Illinois limited partnership, having an address at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER").
WITNESSETH:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents
(as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:
"ADDITIONAL INSOLVENCY OPINION" shall mean any subsequent Insolvency
Opinion.
"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.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
capital expenditures, for the Property prepared by Borrower for the applicable
Fiscal Year or other period.
"ASSIGNMENT OF LEASES" shall mean, with respect to the Property, that
certain first priority Assignment of Leases and Rents, dated as of the Closing
Date, from Borrower, as assignor, to Lender, as assignee, assigning to Lender
all of Borrower's interest in and to the Leases and Rents of the Property as
security for the Loan, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain
Assignment of Management Agreement and Subordination of Management Fees dated as
of the Closing Date among Lender, Borrower and Manager, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of the
Property.
"BASIC CARRYING COSTS" shall mean, with respect to the Property, the
sum of the following costs associated with the Property for the relevant Fiscal
Year or payment period: (i) Taxes and (ii) Insurance Premiums.
"BORROWER" shall mean Inland Western Dallas Lincoln Park Limited
Partnership, together with its permitted successors and assigns.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in Chicago,
Illinois are not open for
business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended
for items capitalized under accounting principles reasonably acceptable to
Lender, consistently applied (including expenditures for building improvements
or major repairs, leasing commissions and tenant improvements).
"CASH EXPENSES" shall mean, for any period, the operating expenses for
the operation of the Property as set forth in an Approved Annual Budget to the
extent that such expenses are actually incurred by Borrower minus any payments
into the Tax and Insurance Escrow Fund.
"CASUALTY" shall have the meaning specified in Section 6.2 hereof.
"CASUALTY/CONDEMNATION PREPAYMENT" shall have the meaning specified in
Section 6.4(e) hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in Section
6.4(b)(iv) hereof.
"CLOSING DATE" shall mean the date hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or
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right accruing thereto, including any right of access thereto or any change of
grade affecting the Property or any part thereof.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Prepayment Consideration) due
to Lender in respect of the Loan under the Note, this Agreement, the Mortgage or
any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the applicable
period in which:
(a) the numerator is the Net Operating Income (excluding interest
on credit accounts) for such period as set forth in the statements required
hereunder, without deduction for (i) actual management fees incurred in
connection with the operation of the Property, (ii) amounts paid to the Reserve
Funds, less (A) management fees equal to the greater of (1) assumed management
fees of four and one-half percent (4.5%) of Gross Income from Operations or (2)
the actual management fees incurred, (B) assumed Replacement Reserve Fund
contributions equal to $0.15 per square foot of gross leaseable area at the
Property; and (C) assumed reserves for tenant improvements and leasing
commissions equal to $0.50 per square foot of gross leaseable area at the
Property; and
(b) the denominator is the aggregate amount of interest due and
payable on the Note for such applicable 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, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
five percent (5%) above the Interest Rate.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 9.2
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 and 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.
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"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-1
by Standard & Poor's Ratings Services, P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.,
and F-1+ by Fitch, Inc. in the case of accounts in which funds are held for 30
days or less (or, in the case of accounts in which funds are held for more than
30 days, the long term unsecured debt obligations of which are rated at least
"AA" by Fitch and S&P and "Aa" by Moody's).
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental
Indemnity Agreement executed by Borrower 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.
"ENVIRONMENTAL REPORT" shall have the meaning as defined in the
Environmental Indemnity executed by the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1(a)
hereof.
"EXCHANGE ACT" shall have the meaning set forth in Section 9.2 hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"GENERAL PARTNER" shall mean Inland Western Dallas Lincoln Park GP,
L.L.C., a Delaware limited liability company.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean all sustainable income as
reported on the financial statements delivered by the Borrower in accordance
with this Agreement, computed in accordance with accounting principles
reasonably acceptable to Lender, consistently applied, derived from the
ownership and operation of the Property from whatever source, INCLUDING, but not
limited to, (i) Rents from Tenants that are in occupancy, open for business and
paying unabated Rent, (ii) utility charges, (iii) escalations, (iv)
intentionally omitted; (v) service fees or charges, (vi) license fees, (vii)
parking fees, and (viii) other required pass-throughs but EXCLUDING (i) Rents
from Tenants that are subject to any bankruptcy proceeding (unless such Tenant
has affirmed its Lease or Inland Western Retail Real Estate Trust, Inc. has
master leased such Tenant's premises for full contract rent for a period not
less than three years, and the net worth of Inland Western Retail Real Estate
Trust, Inc. (as determined by Lender) is not less than such entity's net worth
as of June 30, 2004), or are not in occupancy, open for business or paying
unabated Rent, (ii) sales, use and occupancy or other taxes on receipts required
to be accounted for by Borrower to any Governmental Authority, (iii) refunds and
uncollectible accounts, (iv) sales of furniture, fixtures and equipment, (v)
Insurance
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Proceeds (other than business interruption or other loss of income insurance),
(vi) Awards, (vii) unforfeited security deposits, (viii) utility and other
similar deposits and (ix) any disbursements to Borrower from the Reserve Funds.
Gross income shall not be diminished as a result of the Mortgage or the creation
of any intervening estate or interest in the Property or any part thereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of the Mortgage with respect to the Property.
"INDEBTEDNESS" of a Person, at a particular date, means the sum
(without duplication) at such date of (a) indebtedness or liability for borrowed
money; (b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in any Person or entity, or otherwise to assure a
creditor against loss; and (g) obligations secured by any Liens, whether or not
the obligations have been assumed.
"INDEMNITOR" shall mean Inland Western Retail Real Estate Trust, Inc.,
a Maryland corporation.
"INDEMNITY AGREEMENT" shall mean that certain Indemnity Agreement
dated as of the Closing Date by Borrower and Indemnitor in favor of Lender.
"INDEPENDENT DIRECTOR" shall mean a director of a corporation or a
manager of a limited liability company who is not at the time of initial
appointment, or at any time while serving as a director or manager, as the case
may be, of such an entity, and has not been at any time during the preceding
five (5) years: (a) a stockholder, director (with the exception of serving as
the Independent Director), officer, employee, partner, attorney or counsel of
the Borrower or any Affiliate of either of them; (b) a customer, supplier or
other person who derives any of its purchases or revenues from its activities
with the Borrower or any Affiliate of either of them; (c) a Person controlling
or under common control with any such stockholder, director, officer, partner,
customer, supplier or other Person (other than a fee for its services of being
an Independent Director); or (d) a member of the immediate family of any such
stockholder, director, officer, employee, partner, customer, supplier or other
person. As used in this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise.
"INLAND WESTERN RETAIL REAL ESTATE TRUST, INC." shall mean Inland
Western Retail Real Estate Trust, Inc., a Maryland corporation.
"INSOLVENCY OPINION" shall have the meaning set forth in Section
3.1.6 hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section
6.1(b) hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section
6.4(b) hereof.
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"INTEREST RATE" shall mean four and 61/100 percent (4.61%) per annum.
"LEASE" shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in the
Property of Borrower, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean, with respect to the Property, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting the Property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting the Property or any part
thereof, including, without limitation, any which may (a) require repairs,
modifications or alterations in or to the Property or any part thereof, or (b)
in any way limit the use and enjoyment thereof.
"LENDER" shall mean LaSalle Bank National Association, a national
banking association, together with its successors and assigns.
"LICENSES" shall have the meaning set forth in Section 4.1.22 hereof.
"LIEN" shall mean, with respect to the Property, any mortgage, deed of
trust, deed to secure debt, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting
Borrower, the Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement and evidenced by the Note.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Assignment of Leases and Rents, the Environmental Indemnity,
the Assignment of Management Agreement, the Indemnity Agreement and all other
documents executed and/or delivered in connection with the Loan.
"LOSSES" shall have the meaning set forth in the Indemnity Agreement.
"MANAGEMENT AGREEMENT" shall mean, with respect to the Property, the
management agreement entered into by and between Borrower and the Manager,
pursuant to which the Manager is to provide management and other services with
respect to the Property.
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"MANAGER" shall mean Inland Southwest Management Corp., a Delaware
corporation.
"MATURITY DATE" shall mean November 1, 2009, or such other date on
which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum non-usurious 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.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean an amount equal to
$100,471.11.
"MORTGAGE" shall mean, with respect to the Property, that certain
first priority Deed of Trust, Security Agreement and Fixture Filing, dated the
Closing Date, 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.
"NET CASH FLOW" shall mean, with respect to the Property for any
period, the amount obtained by subtracting Operating Expenses and Capital
Expenditures for such period from Gross Income from Operations for such period.
"NET CASH FLOW AFTER DEBT SERVICE" shall mean, with respect to the
Property for any period, the amount obtained by subtracting Debt Service for
such period from Net Cash Flow for such period.
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in Section
5.1.11(b) hereof.
"NET OPERATING INCOME" shall mean the amount obtained by subtracting
from Gross Income from Operations (i) Operating Expenses, and (ii) a vacancy
allowance equal to the greater of (x) market vacancy (as reasonably determined
by Lender), less actual vacancy, and (y) underwritten vacancy of six percent
(6.0%), less actual vacancy. Notwithstanding the foregoing, if actual vacancy
exceeds market vacancy and underwritten vacancy, then there shall be no
adjustment for a vacancy allowance.
"NET PROCEEDS" shall have the meaning set forth in Section 6.4(b)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
"NET PROCEEDS PREPAYMENT" shall have the meaning set forth in Section
6.4(e) hereof.
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"NOTE" shall mean that certain Promissory Note of even date herewith
in the principal amount of TWENTY-SIX MILLION ONE HUNDRED FIFTY-THREE THOUSAND
AND NO/100 DOLLARS ($26,153,000.00), made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"OFFICERS' CERTIFICATE" shall mean a certificate delivered to Lender
by Borrower which is signed by the General Partner.
"OPERATING EXPENSES" shall mean the total of all expenditures,
computed in accordance with accounting principles reasonably acceptable to
Lender, consistently applied, of whatever kind relating to the operation,
maintenance and management of the Property that are incurred on a regular
monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments as
approved by Lender, and other similar costs, but excluding depreciation, Debt
Service, Capital Expenditures and contributions to the Reserve Funds.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"OTHER CONTRACT FUNDS" shall mean any payment due to Borrower under
any of the agreements described on SCHEDULE X.
"PAYMENT DATE" shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately succeeding Business Day.
"PERMITTED ENCUMBRANCES" shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to the Property or any part thereof, (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 reasonable discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower's ability to repay the Loan.
"PERMITTED INVESTMENTS" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, 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 first Payment Date
following the date of acquiring such investment and meeting one of the
appropriate standards set forth below:
(i) 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
8
obligations are backed by the full faith and credit of the United States of
America including, without limitation, obligations of: 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 (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (C) 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 (D) such investments must not be
subject to liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) 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 Student Loan
Marketing 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 (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) 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 (D) such investments must not be subject to liquidation prior to their
maturity;
(iv) 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 (A) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter affixed to their rating, (C)
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 (D) such investments
must not be subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances
issued by, any bank or
9
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 (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an "r" highlighter affixed to
their rating, (C) 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
(D) such investments must not be subject to liquidation prior to their
maturity;
(vi) 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 (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) 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 (D) such investments must not be subject to liquidation prior to their
maturity;
(vii) 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 (A) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an "r" highlighter affixed to their rating, (C)
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 (D) such investments
must not be subject to liquidation prior to their maturity;
(viii) units of taxable money market funds, 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
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
10
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; and
(ix) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) 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 or (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 120% of the yield to maturity at par
of such underlying investment.
"PERMITTED PREPAYMENT DATE" shall mean the date that is two (2) years
from the first day of the calendar month immediately following the Closing Date.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage with respect to the Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to the Property,
a report prepared by a company satisfactory to Lender regarding the physical
condition of the Property, satisfactory in form and substance to Lender in its
sole discretion, which report shall, among other things, (a) confirm that the
Property and its use complies, in all material respects, with all applicable
Legal Requirements (including, without limitation, zoning, subdivision and
building laws) and (b) include a copy of a final certificate of occupancy with
respect to all Improvements on the Property.
"POLICIES" shall have the meaning specified in Section 6.l(b) hereof.
"PREPAYMENT CONSIDERATION" shall have the meaning set forth in Section
2.3.1.
"PREPAYMENT RATE" shall mean the bond equivalent yield (in the
secondary market) on the United States Treasury Security that as of the
Prepayment Rate Determination Date has a remaining term to maturity closest to,
but not exceeding, the remaining term to the Maturity Date, as most recently
published in the "Treasury Bonds, Notes and Bills" section in The Wall Street
Journal as of the date of the related tender of the payment. If more than one
issue of United States Treasury Securities has the remaining term to the
Maturity Date referred to above, the "Prepayment Rate" shall be the yield on the
United States Treasury Security most recently issued as of such date. If the
publication of the Prepayment Rate in The Wall Street
11
Journal is discontinued, Lender shall determine the Prepayment Rate on the basis
of "Statistical Release H.15(519), Selected Interest Rates," or any successor
publication, published by the Board of Governors of the Federal Reserve System,
or on the basis of such other publication or statistical guide as Lender may
reasonably select.
"PREPAYMENT RATE DETERMINATION DATE" shall mean the date which is five
(5) Business Days prior to the prepayment date.
"PROPERTY" shall mean the parcel of real property, the Improvements
thereon and all personal property owned by Borrower and encumbered by the
Mortgage, together with all rights pertaining to such property and Improvements,
as more particularly described in the Granting Clauses of the Mortgage and
referred to therein as the "Property".
"PROVIDED INFORMATION" shall have the meaning set forth in Section
9.1(a) hereof.
"QUALIFYING ENTITY" shall have the meaning set forth in Section
5.2.l3(b) hereof.
"QUALIFYING MANAGER" shall mean either (a) a reputable and experienced
management organization reasonably satisfactory to Lender, which organization or
its principals possess at least ten (10) years experience in managing properties
similar in size, scope and value of the Property and which, on the date Lender
determines whether such management organization is a Qualifying Manager, manages
at least one million square feet of retail space, provided that Borrower shall
have obtained prior written confirmation from the Rating Agency that management
of the Property by such entity will not cause a downgrading, withdrawal or
qualification of the then current rating of the securities issued pursuant to
the Securitization, or (b) the fee owner of the Property, provided that such
owner possesses experience in managing and operating properties similar in size,
scope and value of the Property. Lender acknowledges that on the Closing Date,
Manager shall be deemed to be a Qualifying Manager.
"RATING AGENCIES" shall mean each of Standard & Poor's Ratings
Services, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc. and
Fitch, Inc., or any other nationally-recognized statistical rating agency which
has been approved by Lender.
"RATING SURVEILLANCE CHARGE" shall have the meaning set forth in
Section 9.3 hereof.
"RELEVANT LEASING THRESHOLD" shall mean, any Lease for an amount of
leaseable square footage equal to or greater than 10,000 square feet.
"RELEVANT RESTORATION THRESHOLD" shall mean Five Hundred Thousand and
No/100 dollars ($500,000.00).
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"RENTS" shall mean, with respect to the Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, without
12
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower or its
agents or employees from any and all sources arising from or attributable to the
Property, and proceeds, if any, from business interruption or other loss of
income insurance, including the Other Contract Funds.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in Section
7.3.1 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth
in Section 7.3.1 hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 7.3.1(a)
hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in Section
7.1.1
"REQUIRED REPAIR FUND" shall have the meaning set forth in Section
7.1.1
"REQUIRED REPAIRS" shall have the meaning set forth in Section 7.1.1
hereof.
"RESERVE FUNDS" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund (if any), or any other
escrow fund established by the Loan Documents.
"RESTORATION" shall have the meaning set forth in Section 6.2 hereof.
"SECURITIES" shall have the meaning set forth in Section 9.1 hereof.
"SECURITIES ACT" shall have the meaning set forth in Section 9.2
hereof.
"SECURITIZATION" shall have the meaning set forth in Section 9.1
hereof.
"SERVICER" shall have the meaning set forth in Section 9.6 hereof.
"SERVICING AGREEMENT" shall have the meaning set forth in Section 9.6
hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
8.2(c) hereof.
"SEVERING DOCUMENTATION" shall have the meaning set forth in Section
9.7 hereof.
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"SPECIAL PURPOSE ENTITY" means a corporation, limited partnership,
limited liability company, or Delaware statutory trust which at all times on and
after the Closing Date:
(i) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating the Property, entering into this Agreement with the
Lender, refinancing the Property in connection with a permitted repayment
of the Loan, and transacting lawful business that is incident, necessary
and appropriate to accomplish the foregoing; or (B) acting as a general
partner of the limited partnership that owns the Property, a member of the
limited liability company that owns the Property or the beneficiary or
trustee of a Delaware statutory trust that owns the Property;
(ii) is not engaged and will not engage in any business unrelated
to (A) the acquisition, development, ownership, management or operation of
the Property, (B) acting as general partner of the limited partnership that
owns the Property, (C) acting as a member of the limited liability company
that owns the Property, or (D) acting as the beneficiary or trustee of a
Delaware statutory trust that owns the Property, as applicable;
(iii) does not have and will not have any assets other than those
related to the Property or its partnership interest in the limited
partnership, the member interest in the limited liability company or the
beneficial interest in the Delaware statutory trust that owns the Property
or acts as the general partner, managing member or beneficiary or trustee
thereof, as applicable;
(iv) has not engaged, sought or consented to and will not engage
in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership, membership or beneficial or trustee interests (if
such entity is a general partner in a limited partnership, a member in a
limited liability company or a beneficiary of a Delaware trust) or
amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation, operating agreement or
trust formation and governance documents (as applicable) with respect to
the matters set forth in this definition;
(v) if such entity is a limited partnership, has as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies;
(vi) if such entity is a corporation, has at least one (1)
Independent Director, and has not caused or allowed and will not cause or
allow the board of directors of such entity to take any action related to a
bankruptcy or insolvency proceeding or a voluntary dissolution without the
unanimous affirmative vote of 100% of the members of its board of
directors, including the Independent Director;
(vii) if such entity is a limited liability company and such limited
liability company has more than one member, such limited liability company
has as its manager a Special Purpose Entity that is a corporation and that
owns at least 1.0% (one percent) of the equity of the limited liability
company;
14
(viii) if such entity is a limited liability company and such limited
liability company has only one member, such limited liability company (a)
has been formed under Delaware law, and (b) has either a corporation or
other person or entity that shall become a member of the limited liability
company upon the dissolution or disassociation of the member, and (c) has
at least one (1) manager that is an Independent Director, and (d) will not
cause or allow its managers to take any action related to a bankruptcy or
insolvency proceeding or a voluntary dissolution without the unanimous
affirmative vote of 100% of its managers, including the Independent
Director;
(ix) if such entity is (a) a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (b) a limited partnership, has a limited
partnership agreement, (c) a corporation, has a certificate or articles of
incorporation and bylaws, as applicable, or (d) a Delaware statutory trust,
has organizational documents that, in each case, provide that such entity
will not: (1) dissolve, merge, liquidate, consolidate; (2) except as
permitted herein, sell all or substantially all of its assets or the assets
of the Borrower (as applicable) except as permitted herein; (3) engage in
any other business activity, or amend its organizational documents with
respect to the matters set forth in this definition without the consent of
the Lender; or (4) without the affirmative vote of all directors of the
corporation (that is such entity or the general partner or managing or
co-managing member or manager of such entity), file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with
respect to itself or to any other entity in which it has a direct or
indirect legal or beneficial ownership interest;
(x) has not entered into or been a party to, and will not enter
into or be a party to, any transaction with its partners, members,
beneficiaries, shareholders or Affiliates except (A) in the ordinary course
of its business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and (B)
in connection with this Agreement;
(xi) is solvent and pays its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the
same become due, and is maintaining adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations;
(xii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(xiii) will file its own tax returns; PROVIDED, however, that
Borrower's assets and income may be included in a tax return of its General
Partner or the sole member of its General Partner if inclusion on such tax
return is in compliance with applicable law;
(xiv) has maintained and will maintain its own resolutions and
agreements;
(xv) (a) has not commingled and will not commingle its funds or
assets with those of any other Person and (b) has not participated and will
not participate in any cash
15
management system with any other Person, except with respect to a custodial
account maintained by the Manager on behalf of Affiliates of Borrower and,
with respect to funds in such custodial account, has separately accounted,
and will continue to separately account for, each item of income and
expense applicable to the Property and Borrower;
(xvi) has held and will hold its assets in its own name;
(xvii) has conducted and will conduct its business in its name or in
a name franchised or licensed to it by an entity other than an Affiliate of
Borrower;
(xviii) has maintained and will maintain its balance sheets, operating
statements and other entity documents separate from any other Person and
has not permitted and will not permit its assets to be listed as assets on
the financial statement of any other entity except as required or permitted
by applicable accounting principles acceptable to Lender, consistently
applied; PROVIDED, HOWEVER, that (i) any such consolidated financial
statement shall contain a note indicating that it maintains separate
balance sheets and operating statements for the Borrower and the Property,
or (ii) if such Person is controlled by Inland Western Retail Real Estate
Trust, Inc., then such Person may be included in the consolidated financial
statement of Inland Western Retail Real Estate Trust, Inc. provided such
consolidated financial statement contains a note indicating that it
maintains separate financial records for each Person controlled by Inland
Western Retail Real Estate Trust, Inc.;
(xix) has maintained and will maintain separate books and records
for the Property;
(xx) has a sufficient number of employees in light of its
contemplated business operations, which may be none;
(xxi) has observed and will observe all partnership, corporate,
limited liability company or Delaware statutory trust formalities, as
applicable;
(xxii) has and will have no Indebtedness (including loans (whether or
not such loans are evidenced by a written agreement) between Borrower and
any Affiliates of Borrower and relating to the management of funds in the
custodial account maintained by the Manager) other than (i) the Loan, (ii)
liabilities incurred in the ordinary course of business relating to the
ownership and operation of the Property and the routine administration of
Borrower, which liabilities are not more than sixty (60) days past the
date incurred (unless disputed in accordance with applicable law), are not
evidenced by a note and are paid when due, and which amounts are normal and
reasonable under the circumstances, and (iii) such other liabilities that
are permitted pursuant to this Agreement;
(xxiii) has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available
to satisfy the obligations of any other Person except as otherwise
permitted pursuant to this Agreement;
16
(xxiv) has not and will not acquire obligations or securities of its
partners, members, beneficiaries or shareholders or any other Affiliate;
(xxv) has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not
limited to, paying for shared office space and services performed by any
employee of an affiliate;
(xxvi) has not maintained or used, and will not maintain or use,
invoices and checks bearing the name of any other Person, PROVIDED,
HOWEVER, that Manager, on behalf of such Person, may maintain and use
invoices and checks bearing Manager's name;
(xxvii) has not pledged and will not pledge its assets for the benefit
of any other Person except as permitted or required pursuant to this
Agreement;
(xxviii) has held itself out and identified itself and will hold
itself out and identify itself as a separate and distinct entity under its
own name or in a name franchised or licensed to it by an entity other than
an Affiliate of Borrower and not as a division or part of any other Person,
except for services rendered by Manager under the Management Agreement, so
long as Manager holds itself out as an agent of the Borrower;
(xxix) has maintained and will maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other Person;
(xxx) has not made and will not make loans to any Person or hold
evidence of indebtedness issued by any other person or entity (other than
cash and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(xxxi) has not identified and will not identify its partners,
members, beneficiaries or shareholders, or any Affiliate of any of them, as
a division or part of it, and has not identified itself and shall not
identify itself as a division of any other Person;
(xxxii) does not and will not have any of its obligations guaranteed
by any Affiliate except as otherwise required in the Loan Documents;
(xxxiii) has not entered into or been a party to, and will not enter
into or be a party to, any transaction with its partners, members,
beneficiaries, shareholders or Affiliates except (A) in the ordinary course
of its business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and (B)
in connection with this Agreement; and
(xxxiv) has complied and will comply with all of the terms and
provisions contained in its organizational documents. The statement of
facts contained in its organizational documents are true and correct and
will remain true and correct.
17
"STATE" shall mean, with respect to the Property, the State or
Commonwealth in which the Property or any part thereof is located.
"SURVEY" shall mean a survey of the Property in question prepared by
a surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
Section 7.2 hereof regardless of whether the funds held therein are held by
Lender for the payment of Taxes or Insurance Premiums or both.
"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 any part thereof.
"TENANT" shall mean any person or entity with a possessory right to
all or any part of the Property pursuant to a Lease or other written agreement.
"TERRORISM INSURANCE GUARANTOR" shall have the meaning set forth in
Section 6.1 hereof.
"TITLE INSURANCE POLICY" shall mean, with respect to the Property, an
ALTA mortgagee title insurance policy in the form (acceptable to Lender) (or, if
the Property is in a State which does not permit the issuance of such ALTA
policy, such form as shall be permitted in such State and acceptable to Lender)
issued with respect to the Property and insuring the lien of the Mortgage
encumbering the Property.
"TRANSFEREE" shall have the meaning set forth in Section 5.2.13
hereof.
"TRUSTEE" shall have the meaning set forth in the Mortgage.
"UCC" OR "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State in which the Property is located.
"U.S. OBLIGATIONS" shall mean direct non-callable obligations of the
United States of America as defined in Section 2(a)(16) of the Investment
Company Act as amended (15 USC 80a-1) stated in REMIC Section 1.86 OG-2(a)(8).
Section 1.2 PRINCIPLES OF CONSTRUCTION. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified. All uses of the word "including" shall mean "including, without
limitation" unless the context shall indicate otherwise. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
18
ARTICLE II
GENERAL TERMS
Section 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be re-borrowed.
2.1.3 THE NOTE, MORTGAGE AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Note and secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan
to (a) repay and discharge any existing loans relating to the Property, (b) pay
all past-due Basic Carrying Costs, if any, in respect of the Property, (c) make
deposits into the Reserve Funds on the Closing Date in the amounts provided
herein, (d) pay costs and expenses incurred in connection with the closing of
the Loan, as approved by Lender, (c) fund any working capital requirements of
the Property, and (f) distribute the balance, if any, to Borrower.
Section 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE
2.2.1 INTEREST GENERALLY. Interest on the outstanding principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Interest Rate.
2.2.2 INTEREST CALCULATION. Interest on the outstanding principal
balance of the Loan shall be calculated on the basis of a three hundred sixty
(360) day year comprised of twelve (12) months of thirty (30) days each, except
that interest due and payable for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed in the period for
which the calculation is being made by a daily rate based on a three hundred
sixty (360) day year.
2.2.3 PAYMENTS GENERALLY. Borrower shall pay to Lender (a) on the
Closing Date, an amount equal to interest only on the outstanding principal
balance of the Loan from the Closing Date up to but not including the first
Payment Date following the Closing Date, and (b) on December 1, 2004 and each
Payment Date thereafter up to but not including the Maturity Date, an amount
equal to the Monthly Debt Service Payment Amount, which shall be applied to
interest on the outstanding principal amount of the Loan for the prior calendar
month at the Interest Rate.
2.2.4 INTENTIONALLY OMITTED.
19
2.2.5 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and other the Loan Documents.
2.2.6 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, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) in the
event of a non-monetary default, the cure of such Event of Default by Borrower
and acceptance of such cure by Lender, and (ii) in the event of a monetary
default, the actual receipt and collection of the Debt (or that portion thereof
that is then due). 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 Mortgage. 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 and Lender retains its rights
under the Note and this Agreement to accelerate and to continue to demand
payment of the Debt upon the happening and continuance of any Event of Default.
2.2.7 LATE PAYMENT CHARGE. If any principal, interest or any other
sums due under the Loan Documents is not paid by Borrower on or prior to the
date which is ten (10) days after 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 amount permitted by applicable law in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgage and the other Loan
Documents to the extent permitted by applicable law. The foregoing late payment
charge shall not apply to the payment of all outstanding principal, interest and
other sums due on the Maturity Date.
2.2.8 USURY SAVINGS. Notwithstanding anything to the contrary
contained in this Agreement, the Note, the Mortgage, or any of the other Loan
Documents, neither the Interest Rate nor the Default Rate shall at any time
exceed the Maximum Rate. The term "Maximum Rate," as used herein, shall mean, on
any day, the highest non-usurious rate of interest (if any) permitted by
applicable law on such day. For purposes of Chapter 303 of the Texas Finance
Code, as it may from time to time be amended, the Maximum Rate shall be the
"weekly ceiling" as defined in Section 303.002 of said Code and as computed in
accordance with Section 303.003 of said Code, from time to time in effect;
provided, however, that to the extent permitted by applicable law, Lender
reserves the right to change, from time to time by further notice and disclosure
to Borrower, the ceiling on which the Maximum Rate is based under Chapter 303 of
said Code; and, provided further, that the "highest non-usurious rate of
interest permitted by applicable law" for purposes of this Agreement, the Note,
the Mortgage or any of the other Loan Documents shall not be limited to the
applicable rate ceiling under Chapter 303 of said Code if federal laws or other
state laws now or hereafter in effect and applicable to this Agreement, the
Note, the Mortgage or any of the other Loan Documents (and the interest
contracted for, charged and collected hereunder) shall permit a higher rate of
interest. In no event shall the Loan be
20
considered a revolving credit account as defined in Chapter 346 of the Texas
Finance Code, as may be hereafter amended or recodified.
It is the intention of the parties hereto to comply with the usury laws of
the State of Texas and the United States of America. The parties hereto do not
intend to contract for, charge or receive any interest or other charge which is
usurious, and by execution of this Agreement, the Note, the Mortgage or any of
the other Loan Documents, Borrower agrees that Lender has no such intent. This
Agreement, the Note, the Mortgage, the other Loan Documents and all other
agreements between Borrower and Lender or any other holder hereof, which are now
existing or hereafter arising, whether written or oral, are hereby expressly
limited so that in no event whatsoever, whether by reason of acceleration of
maturity hereof, or otherwise, shall the amount paid, or agreed to be paid, to
Lender or any other holder hereof for the use, forbearance or detention of the
money to be due hereunder or otherwise, or for the payment or performance of any
covenant or obligation contained herein or in any other document evidencing,
securing or pertaining to the Debt, exceed the Maximum Rate. If from any
circumstance whatsoever fulfillment of any provisions hereof or other document,
at the time performance of such provisions shall be due, shall involve
transcending the valid limits prescribed by law, then ipso facto, the obligation
to be fulfilled shall be reduced to the Maximum Rate, and if from any such
circumstance Lender or any other holder shall ever receive as interest or
otherwise an amount which will exceed the Maximum Rate, such amount which would
be excessive interest shall be applied to the reduction of the principal amount
owing hereunder (without prepayment premium or penalty) or on account of any
other principal indebtedness of Borrower to the holder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof and such other indebtedness, such excess shall be refunded to Borrower.
All sums paid and agreed to be paid to Lender or any other holder for use,
forbearance or detention of the indebtedness of Borrower shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the period until payment in full on the Note (or any renewals,
extensions and rearrangement thereof) so that the actual rate of interest on
account of the Debt is uniform throughout the term of the Note (and all
renewals, extensions and rearrangements hereof) and does not exceed the Maximum
Rate. The terms and provisions of this Article 2.2.8 shall control and supersede
any other provision of this Agreement or the other Loan Documents.
Section 2.3 PREPAYMENTS.
2.3.1 VOLUNTARY PREPAYMENTS.
(a) Except as otherwise provided herein, Borrower shall not have
the right to prepay the Loan in whole or in part prior to the Permitted
Prepayment Date. After the Permitted Prepayment Date, Borrower may, provided it
has given Lender prior written notice in accordance with the terms of this
Agreement, prepay the unpaid principal balance of the Loan in whole, but not in
part, by paying, together with the amount to be prepaid, (i) interest accrued
and unpaid on the outstanding principal balance of the Loan being prepaid to and
including the date of prepayment, (ii) unless prepayment is tendered on a
Payment Date, an amount equal to the interest that would have accrued on the
amount being prepaid after the date of prepayment through and including the next
Payment Date had the prepayment not been made (which amount shall constitute
additional consideration for the prepayment), (iii) all other sums then due
under
21
this Agreement, the Note, the Mortgage and the other Loan Documents, and (iv) if
prepayment occurs prior to the Payment Date which is three (3) months prior to
the Maturity Date, a prepayment consideration (the "PREPAYMENT CONSIDERATION")
equal to the greater of (A) one percent (1%) of the outstanding principal
balance of the Loan being prepaid or (B) the excess, if any, of (1) the sum of
the present values of all then-scheduled payments of principal and interest
under this Agreement including, but not limited to, principal and interest due
on October 1, 2009 (with each such payment discounted to its present value at
the date of prepayment at the rate which, when compounded monthly, is equivalent
to the Prepayment Rate), over (2) the outstanding principal amount of the Loan.
Lender shall notify Borrower of the amount and the basis of determination of the
required prepayment consideration.
(b) On the Payment Date that is three (3) months prior to the
Maturity Date, and on each day thereafter through the Maturity Date, Borrower
may, at its option, prepay the Debt without payment of any Prepayment
Consideration or other penalty or premium; PROVIDED, HOWEVER, if such prepayment
is not paid on a regularly scheduled Payment Date, the Debt shall include
interest that would have accrued on such prepayment through and including the
day immediately preceding the Maturity Date. Borrower's right to prepay any
portion of the principal balance of the Loan shall be subject to (i) Borrower's
submission of a notice to Lender setting forth the amount to be prepaid and the
projected date of prepayment, which date shall be no less than thirty (30) days
from the date of such notice, and (ii) Borrower's actual payment to Lender of
the amount to be prepaid as set forth in such notice on the projected date set
forth in such notice or any day following such projected date occurring in the
same calendar month as such projected date.
2.3.2 MANDATORY PREPAYMENTS. (a) On the next occurring Payment Date
following the date on which Borrower actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower
pursuant to this Agreement for the restoration of the Property, Borrower shall,
at Lender's option, prepay the outstanding principal balance of the Note in an
amount equal to one hundred percent (100%) of such Net Proceeds. No Prepayment
Consideration or other penalty or premium shall be due in connection with any
prepayment made pursuant to this Section 2.3.2. Any partial prepayment under
this Section shall be applied to the last payments of principal due under the
Loan.
(b) On the date on which Borrower tenders a Casualty/Condemnation
Prepayment pursuant to Section 6.4(e) below, such tender shall include (a) all
accrued and unpaid interest and the principal indebtedness being prepaid,
including interest on the outstanding principal amount of the applicable Note
through the last day of the month within which such tender occurs, and (b) any
other sums due hereunder relating to the applicable Note. Except as set forth in
this Section 2.3.2(b), other than following an Event of Default, no Prepayment
Consideration or other penalty or premium shall be due in connection with any
Casualty/Condemnation Prepayment.
2.3.3 PREPAYMENTS AFTER DEFAULT. Following an Event of Default, if
Borrower or anyone on Borrower's behalf makes a tender of payment of all or any
portion of the Debt at any time prior to a foreclosure sale (including a sale
under the power of sale under the Mortgage), or during any redemption period
after foreclosure, (i) the tender of payment shall constitute an evasion of
Borrower's obligation to pay any Prepayment Consideration due under this
22
Agreement and such payment shall, therefore, to the maximum extent permitted by
law, include a premium equal to the Prepayment Consideration that would have
been payable on the date of such tender had the Loan not been so accelerated, or
(ii) if at the time of such tender a prepayment of the principal amount of the
Loan would have been prohibited under this Agreement had the principal amount of
the Loan not been so accelerated, the tender of payment shall constitute an
evasion of such prepayment prohibition and shall, therefore, to the maximum
extent permitted by law, include an amount equal to the greater of (i) 1% of the
then principal amount of the Loan (or the relevant portion thereof being
prepaid) and (ii) an amount equal to the excess of (A) the sum of the present
values of a series of payments payable at the times and in the amounts equal to
the payments of principal and interest (including, but not limited to the
principal and interest payable on the Maturity Date) which would have been
scheduled to be payable after the date of such tender under this Agreement had
the Loan (or the relevant portion thereof) not been accelerated, with each such
payment discounted to its present value at the date of such tender at the rate
which when compounded monthly is equivalent to the Prepayment Rate, over (B) the
then principal amount of the Loan.
Section 2.4 INTENTIONALLY OMITTED.
Section 2.5 RELEASE OF PROPERTY. Except as set forth in this Section 2.5,
no repayment or prepayment of all or any portion of the Loan shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien of
the Mortgage on the Property. If Borrower has elected to prepay the entire
amount of the Loan pursuant to Section 2.3.1 and the requirements of this
Section 2.5 have been satisfied, the Property shall be released from the Lien of
the Mortgage.
2.5.1 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of Section 2.3.1 of this
Loan Agreement, release the Lien of the Mortgage on the Property not theretofore
released.
2.5.2 INTENTIONALLY OMITTED.
Section 2.6 MANNER OF MAKING PAYMENTS.
2.6.1. MAKING OF PAYMENTS. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the Automatic Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m., Chicago City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day.
2.6.2 NO DEDUCTIONS, ETC. All payments made by Borrower hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without any deduction for, any setoff, defense or counterclaims.
2.6.3 INTENTIONALLY OMITTED.
23
SECTION 2.7 INTENTIONALLY OMITTED.
ARTICLE III
CONDITIONS PRECEDENT
Section. 3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of Lender to
make the Loan hereunder is subject to the fulfillment by Borrower or waiver by
Lender of the following conditions precedent no later than the Closing Date:
3.1.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
3.1.2
LOAN AGREEMENT AND NOTE. Lender shall have received a copy of
this Agreement and the Note, in each case, duly executed and delivered on behalf
of Borrower.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES,
ETC.
(a) MORTGAGE, ASSIGNMENT OF LEASES AND OTHER LOAN DOCUMENTS.
Lender shall have received from Borrower fully executed and acknowledged
counterparts of the Mortgage and the Assignment of Leases and evidence that
counterparts of the Mortgage and Assignment of Leases have been delivered to the
title company for recording, in the reasonable judgment of Lender, so as to
effectively create upon such recording valid and enforceable first priority
Liens upon the Property in favor of Lender (or such trustee as may be required
under local law), subject only to the Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents. Lender shall have also
received from Borrower fully executed counterparts of the Assignment of
Management Agreement and the other Loan Documents.
(b) TITLE INSURANCE. Lender shall have received a Title Insurance
Policy issued by a title company acceptable to Lender and dated as of the
Closing Date. Such Title Insurance Policy shall (i) provide coverage in an
amount equal to the principal amount of the Loan together with, if applicable, a
"tie-in" or similar endorsement, (ii) insure Lender that the Mortgage creates a
valid first priority lien on the Property encumbered thereby, free and clear of
all exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (iii) contain such endorsements and affirmative coverages as
Lender may reasonably request, and (iv) name Lender, its successors and assigns,
as the insured. The Title Insurance Policy shall be assignable without cost to
Lender. Lender also shall have received evidence that all premiums in respect
of such Title Insurance Policy have been paid.
(c) SURVEY. Lender shall have received a title survey for the
Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor
24
satisfactory to Lender in accordance with the most recent Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys. The following additional
items from the list of "Optional Survey Responsibilities and Specifications"
(Table A) should be added to each survey: 1, 2, 3, 4, 6, 8, 9, 10, 11, 13, 14,
15 and 16. The survey shall reflect the same legal description contained in the
Title Insurance Policy relating to the Property referred to in clause (ii) above
and shall include, among other things, a legal description of the real property
comprising part of such Property reasonably satisfactory to Lender. The
surveyor's seal shall be affixed to each survey and the surveyor shall provide a
certification for each survey in form and substance acceptable to Lender.
(d) INSURANCE. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) ENVIRONMENTAL REPORTS. Lender shall have received an
environmental report in respect of the Property, in each case reasonably
satisfactory to Lender.
(f) ZONING. With respect to the Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with respect to the
Property from the appropriate municipal authorities (or other Persons)
concerning applicable zoning and building laws, (ii) an ALTA 3.1 zoning
endorsement to the Title Insurance Policy, if available or (iii) other evidence
of zoning compliance, in each case in substance reasonably satisfactory to
Lender.
(g) ENCUMBRANCES. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien on the Property as of the Closing Date with respect to the Mortgage,
subject only to applicable Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.
3.1.4 RELATED DOCUMENTS. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parries thereto and
Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business, as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the
appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates as may be requested by Lender.
3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have received
opinions of Borrower's counsel (and if applicable, Borrower's local counsel) (a)
with respect to non-consolidation issues (an "INSOLVENCY OPINION") and (b) with
respect to due execution, authority, enforceability of the Loan Documents and
such other matters as Lender may reasonably require,
25
all such opinions in form, scope and substance reasonably satisfactory to Lender
and Lender's counsel in their reasonable discretion.
3.1.7 BUDGETS. Borrower shall have delivered, and Lender shall have
approved, the Annual Budget for the current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Borrower shall have paid all Basic
Carrying Costs relating to the Property which are in arrears, including without
limitation, (a) accrued but unpaid insurance premiums relating to the Property,
(b) currently due and payable Taxes (including any in arrears) relating to the
Property, and (c) currently due Other Charges relating to the Property, which
amounts shall be funded with proceeds of the Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All organizational proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as
Lender may reasonably request.
3.1.10 PAYMENTS. All payments, deposits or escrows required to be
made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.
3.1.11 TENANT ESTOPPELS. Borrower shall exercise reasonable
commercial efforts to deliver estoppel certificates from Tenants occupying not
less than seventy percent (70%) of the gross leasable area of the Property;
provided, however, that, in the event that Borrower is unable to deliver some or
all of the estoppels described above in this Section 3.1.11, Lender agrees that
the requirement to deliver such letters to Lender shall be waived by Lender as a
condition precedent to the closing of the Loan so long as Borrower delivers on
or before the Closing Date, a certificate executed by Borrower with respect to
all applicable leases which shall be in substantially the same form and contain
the same terms as set forth in Lender's standard form of estoppel certificate.
At any time and from time to time, Lender may request that Tenant obtain
estoppel certificates from Tenants occupying the Property. If requested by
Lender Borrower agrees to use commercially reasonable efforts to obtain the
estoppel certificates that Lender is requesting, which estoppel certificates
shall be in form and substance acceptable to Lender in its reasonable
discretion.
3.1.12 TRANSACTION COSTS. Borrower shall have paid or reimbursed
Lender for all title insurance premiums, recording and filing fees or taxes,
costs of environmental reports, Physical Conditions Reports, appraisals and
other reports, the fees and costs of Lender's counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.
3.1.13 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition or business condition of Borrower or
the Property since the date of the most recent financial statements delivered to
Lender. The income and expenses of the Property, the occupancy leases thereof,
and all other features of the transaction shall be as
26
represented to Lender without material adverse change. Neither Borrower, any of
its constituent Persons, shall be the subject of any bankruptcy, reorganization,
or insolvency proceeding.
3.1.14 LEASES AND RENT ROLL. Lender shall have received copies of all
tenant leases, certified copies of any tenant leases as requested by Lender and
certified copies of all ground leases affecting the Property. Lender shall have
received a current certified rent roll of the Property, reasonably satisfactory
in form and substance to Lender.
3.1.15 SUBORDINATION AND ATTORNMENT. Lender shall have received
appropriate instruments acceptable to Lender in its commercially reasonable
discretion subordinating any Leases of record prior to the Mortgage and
including an agreement by such Tenants to attorn to Lender in the event of a
foreclosure or delivery of a deed in lieu thereof.
3.1.16 TAX LOT. Lender shall have received evidence that the Property
constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 PHYSICAL CONDITIONS REPORTS. Lender shall have received
Physical Conditions Reports with respect to the Property, which reports shall be
reasonably satisfactory in form and substance to Lender.
3.1.18 MANAGEMENT AGREEMENT. Lender shall have received a certified
copy of the Management Agreement with respect to the Property which shall be
satisfactory in form and substance to Lender. Lender acknowledges that it has
reviewed the Management Agreement, and as drafted, such Management Agreement
does not violate Borrower's covenant that affiliated agreements be on terms
which are intrinsically fair, commercially reasonable and are no less favorable
to it than would be obtained in a comparable arm's length transaction with an
unrelated third party.
3.1.19 APPRAISAL. Lender shall have received an appraisal of the
Property, which shall be satisfactory in form and substance to Lender.
3.1.20 FINANCIAL STATEMENTS. Lender shall have received (a) a balance
sheet with respect to the Property for the two most recent Fiscal Years and
statements of income and statements of cash flows with respect to the Property
for the three most recent Fiscal Years, each in form and substance reasonably
satisfactory to Lender or (b) such other financial statements relating to the
ownership and operation of the Property, in form and substance reasonably
satisfactory to Lender.
3.1.21 FURTHER DOCUMENTS. Lender or its counsel shall have received
such other and further approvals, opinions, documents and information as Lender
or its counsel may have reasonably requested including the Loan Documents in
form and substance reasonably satisfactory to Lender and its counsel.
3.1.22 ENVIRONMENTAL INSURANCE. If required by Lender, Borrower shall
have obtained a secured creditor environmental insurance policy with respect to
the Property, which shall be in form and substance satisfactory to Lender. Any
such policy shall have a term not less
27
than the term of the Loan. Borrower shall have provided to Lender evidence that
the premiums for such policy has been paid in full.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 BORROWER REPRESENTATIONS. Borrower represents and warrants as
of the date hereof and as of the Closing Date that:
4.1.1 ORGANIZATION. Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own the
Property and to transact the businesses in which it is now engaged. Borrower is
duly qualified to do business and is in good standing in each jurisdiction where
it is required to be so qualified in connection with the Property, businesses
and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the
Property 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.
4.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust,
loan agreement, partnership agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Borrower or any of Borrower's properties or
assets, and any consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory authority or other
governmental agency or body required for the execution, delivery and performance
by Borrower of this Agreement or any other Loan Documents has been obtained and
is in full force and effect.
4.1.4 LITIGATION. To Borrower's knowledge, there are no actions,
suits or proceedings at law or in equity by or before any Governmental Authority
or other agency now pending or threatened against or affecting Borrower or the
Property, which actions, suits or proceedings, if determined against Borrower or
the Property, might materially adversely affect
28
the condition (financial or otherwise) or business of Borrower or the condition
or ownership of the Property.
4.1.5 AGREEMENTS. Except such instruments and agreements set forth
as Permitted Encumbrances in the title Insurance Policy, Borrower is not a party
to any agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower or the Property, or Borrower's
business, properties or assets, operations or condition, financial or otherwise.
To Borrower's knowledge, 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 are bound. Borrower has no material financial
obligation under any indenture, mortgage, deed of trust,
loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower or the
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Property and (b) obligations under the Loan
Documents.
4.1.6 TITLE. Borrower has good and indefeasible 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 Mortgage, when
properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected 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 assignment of,
all personalty (including the Leases), all in accordance with the terms thereof,
in each case subject only to any applicable Permitted Encumbrances, such other
Liens as are permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. There are no claims for payment for work, labor or materials
affecting the Property which are due and unpaid under the contracts pursuant to
which such work or labor was performed or materials provided which are or may
become a lien prior to, or of equal priority with, the Liens created by the Loan
Documents.
4.1.7 SOLVENCY: NO BANKRUPTCY FILING. Borrower (a) has not entered
into the transaction or executed the Note, this Agreement or any other Loan
Documents with the actual intent to hinder, delay or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
such Loan Documents. Giving effect to the Loan, the fair saleable value
of Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations
29
of Borrower). Except as expressly disclosed to Lender in writing, no petition in
bankruptcy has been filed against Borrower, or to the best of Borrower's
knowledge, any constituent Person in the last seven (7) years, and neither
Borrower, nor to the best of Borrower's knowledge, any constituent Person in the
last seven (7) years has ever made an assignment for the benefit of creditors or
taken advantage of any insolvency act for the benefit of debtors. Neither
Borrower nor any of its constituent Persons are contemplating either the filing
of a petition by it under any state or federal bankruptcy or insolvency laws or
the liquidation of all or a major portion of Borrower's assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or such constituent Persons.
4.1.8 FULL AND ACCURATE DISCLOSURE. To Borrower's knowledge, no
statement of fact made by Borrower in this Agreement or in any of the other Loan
Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no material fact presently known to Borrower which has not
been disclosed to Lender which adversely affects, nor as far as Borrower can
foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower.
4.1.9 NO PLAN ASSETS. Borrower 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 Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this
Loan Agreement.
4.1.10 COMPLIANCE. To Borrower's knowledge, Borrower and the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority. There has not
been committed by Borrower or, 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 the federal government or any other Governmental Authority
the right of forfeiture as against the Property or any part thereof or any
monies paid in performance of Borrower's obligations under any of the Loan
Documents.
4.1.11 FINANCIAL INFORMATION. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of the Property (i) are,
to the best of Borrower's knowledge, true, complete and correct in all material
respects, (ii) accurately represent the financial condition of the Property as
of the date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with accounting principles reasonably acceptable to Lender, consistently applied
throughout the periods covered, except as disclosed therein; PROVIDED, HOWEVER,
that if any financial data is delivered to Lender by any Person other than
Borrower, Indemnitor or any of their Affiliates, or if such financial data has
been prepared
30
by or at the direction of any Person other than Borrower, Indemnitor or any of
their Affiliates, then the foregoing representations with respect to such
financial data shall be to the best of Borrower's knowledge, after due inquiry.
Borrower does not have any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Borrower and reasonably
likely to have a materially adverse effect on the Property or the operation
thereof as a retail shopping center, except as referred to or reflected in said
financial statements. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
4.1.12 CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower's knowledge, is contemplated with respect to all or
any portion of the Property or for the relocation of roadways providing access
to the Property.
4.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.14 UTILITIES AND PUBLIC ACCESS. The Property has rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Property for its respective intended
uses. All public utilities necessary or convenient to the full use and enjoyment
of the Property are located either in the public right-of-way abutting the
Property (which are connected so as to serve the Property without passing over
other property) or in recorded easements serving the Property and such easements
are set forth in and insured by the Title Insurance Policy. All roads necessary
for the use of the Property for their current respective purposes have been
completed and dedicated to public use and accepted by all Governmental
Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. The Property is comprised of one (1) or more
parcels which constitute a separate tax lot or lots and does not constitute a
portion of any other tax lot not a part of the Property.
4.1.17 ASSESSMENTS. There are no pending, or to Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements to
the Property that may result in such special or other assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right
31
thereunder, render the Loan Documents unenforceable, and Borrower has not
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto.
4.1.19 NO PRIOR ASSIGNMENT. There is no prior assignment of the
Leases or any portion of the Rents by Borrower or any of its predecessors in
interest, given as collateral security which are presently outstanding.
4.1.20 INSURANCE. Borrower has obtained and has delivered to Lender
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. To the best of
Borrower's knowledge, no claims have been made under any such policy, and no
Person, including Borrower, has done, by act or omission, anything which would
impair the coverage of any such policy.
4.1.21 USE OF PROPERTY. The Property is used exclusively for retail
purposes and other appurtenant and related uses.
4.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required to be obtained by Borrower for the
legal use, occupancy and operation of the Property as a retail shopping center
have been obtained and are in full force and effect, and to the best of
Borrower's knowledge, after due inquiry, all certifications, permits, licenses
and approvals, including without limitation, certificates of completion and
occupancy permits required to be obtained by any Person other than Borrower for
the legal use, occupancy and operation of the Property as a retail shopping
center, have been obtained and are in full force and effect (all of the
foregoing certifications, permits, licenses and approvals are collectively
referred to as the "LICENSES"). Borrower shall and shall cause all other Persons
to, keep and maintain all licenses necessary for the operation of the Property
as a retail shopping center. To Borrower's knowledge, the use being made of the
Property is in conformity with all certificates of occupancy issued for the
Property.
4.1.23 FLOOD ZONE. To the best of Borrower's knowledge, after due
inquiry, no Improvements on the Property are located in an area identified by
the Federal Emergency Management Agency as an area having special flood hazards.
4.1.24 PHYSICAL CONDITION. Except as disclosed in the Physical
Conditions Reports delivered to Lender in connecting with this Loan, to
Borrower's knowledge, the Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in the Property, whether latent or otherwise, and
Borrower has not received notice from any insurance company or bonding company
of any defects or inadequacies in the Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
32
4.1.25 BOUNDARIES. To the best of Borrower's knowledge, after due
inquiry, all of the improvements which were included in determining the
appraised value of the Property lie wholly within the boundaries and building
restriction lines of the Property, and no improvements on adjoining properties
encroach upon the Property, and no easements or other encumbrances upon the
Property encroach upon any of the improvements, so as to affect the value or
marketability of the Property except those which are insured against by title
insurance.
4.1.26 LEASES. The Property is not subject to any Leases other than
the Leases described on the Rent Roll attached as SCHEDULE IV hereto and made a
part hereof. To the best of Borrower's knowledge after due inquiry, no Person
has any possessory interest in the Property or right to occupy the same except
under and pursuant to the provisions of the Leases. The current Leases are in
full force and effect and to Borrower's knowledge after inquiry, there are no
defaults thereunder by either party and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder. To the best of Borrower's knowledge after due inquiry, no Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date. To the best of Borrower's knowledge after due inquiry, all work
to be performed by Borrower under each Lease has been performed as required and
has been accepted by the applicable tenant, and any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or abatements
required to be given by Borrower to any tenant has already been received by such
tenant. To the best of Borrower's knowledge after due inquiry, there has been no
prior sale, transfer or assignment, hypothecation or pledge of any Lease or of
the Rents received therein which is outstanding. To Borrower's knowledge after
inquiry, except as set forth on SCHEDULE IV, no tenant listed on SCHEDULE IV has
assigned its Lease or sublet all or any portion of the premises demised thereby,
no such tenant holds its leased premises under assignment or sublease, nor does
anyone except such tenant and its employees occupy such leased premises. No
tenant under any Lease has a right or option pursuant to such Lease or otherwise
to purchase all or any part of the leased premises or the building of which the
leased premises are a part. Except as set forth in SCHEDULE IV, no tenant under
any Lease has any right or option for additional space in the Improvements
except as set forth in SCHEDULE IV. To Borrower's actual knowledge based on the
Environmental Report delivered to Lender in connection herewith, no hazardous
wastes or toxic substances, as defined by applicable federal, state or local
statutes, rules and regulations, have been disposed, stored or treated by any
tenant under any Lease on or about the leased premises nor does Borrower have
any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation, treatment,
storage, disposal or transportation of any petroleum product or any toxic or
hazardous chemical, material, substance or waste, except in either event, in
compliance with applicable federal, state or local statues, rules and
regulations.
4.1.27 SURVEY. The Survey for the Property delivered to Lender in
connection with this Agreement has been prepared in accordance with the
provisions of Section 3.1.3(c) hereof, and does not fail to reflect any material
matter affecting the Property or the title thereto.
4.1.28 LOAN TO VALUE. The maximum principal amount of the Note does
not exceed one hundred twenty-five percent (125%) of the fair market value of
the Property as set forth on the appraisal of the Property delivered to Lender.
33
4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the acquisition of the Property by Borrower have been paid or
are simultaneously being paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid, and, under current Legal Requirements, the Mortgage is
enforceable in accordance with its terms by Lender (or any subsequent holder
thereof).
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS. (a) Until the Debt has
been paid in full, Borrower hereby represents, warrants and covenants that the
Borrower is, shall be and shall continue to be a Special Purpose Entity. If
Borrower consists of more than one Person, each such Person shall be a Special
Purpose Entity.
(b) The representations, warranties and covenants set forth in
Section 4.1.30(a) shall survive for so long as any amount remains payable to
Lender under this Agreement or any other Loan Document.
(c) Any and all of the assumptions made in any Insolvency
Opinion, including, but not limited to, any exhibits attached thereto, will have
been and shall be true and correct in all respects, and Borrower will have
complied and will comply with all of the assumptions made with respect to it in
any Insolvency Opinion. Each entity other than Borrower with respect to which an
assumption is made in any Insolvency Opinion will have complied and will comply
with all of the assumptions made with respect to it in any such Insolvency
Opinion.
4.1.31 MANAGEMENT AGREEMENT. The Management Agreement is in full
force and effect and, to Borrower's knowledge, there is no default thereunder by
any party thereto and no event has occurred that, with the passage of time
and/or the giving of notice would constitute a default thereunder.
4.1.32 ILLEGAL ACTIVITY. To Borrower's knowledge, no portion of the
Property has been or will be purchased with proceeds of any illegal activity.
4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower 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, provided, however, that if such
information was provided to Borrower by non-affiliated third parties, Borrower
represents that such information is, to the best of its knowledge after due
inquiry, 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
34
disclose any material fact that could cause any representation or warranty made
herein to be materially misleading.
4.1.34 INVESTMENT COMPANY ACT. Borrower is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
4.1.35 PRINCIPAL PLACE OF BUSINESS AND ORGANIZATION. Borrower shall
not change its principal place of business set forth in the introductory
paragraph of this Agreement without first giving Lender thirty (30) days prior
written notice. Borrower shall not change the place of its organization as set
forth in the introductory paragraph of this Agreement without the consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Upon Lender's request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender's security interest in the
Property as a result of such change of principal place of business or place of
organization.
4.1.36 OFAC. Borrower represents and covenants that it is not and
will not become a person (individually, a "PROHIBITED PERSON" and collectively
"PROHIBITED PERSONS") listed on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, U.S. Department
of the Treasury (the, "OFAC LIST") or otherwise subject to any other
prohibitions or restriction imposed by laws, regulations or executive orders,
including Executive Order No. 13224, administered by OFAC (as may be amended
from time to time, collectively the "OFAC RULES"). Borrower represents and
covenants that it also (i) is not and will not become owned or controlled by a
Prohibited Person, (ii) is not acting and will not act for or on behalf of a
Prohibited Person, (iii) is not otherwise associated with and will not become
associated with a Prohibited Person, (iv) is not providing and will not provide
any material, financial or technological support for or financial or other
service to or in support of acts of terrorism or a Prohibited Person. Borrower
will not transfer any interest in Borrower to or enter into a Lease with any
Prohibited Person. Borrower shall immediately notify Lender if Borrower has
actual knowledge (after commercially reasonable due diligence and inquiry) that
Indemnitor or any member or beneficial owner of Borrower or Indemnitor is or
becomes a Prohibited Person or (A) is indicted on or (B) arraigned and held over
on charges involving money laundering or predicate crimes to money laundering.
Borrower will not enter into any lease or undertake any activities related to
this Agreement in violation of the federal Bank Secrecy Act (as amended from
time to time, the "BSA"), 31 U.S.C. Section 5311, et seq. or any federal or
state laws, including but not limited to 18 U.S.C. Sections 1956, 1957 and 1960,
prohibiting money laundering and terrorist financing (as amended from time to
time, collectively the "ANTI-MONEY LAUNDERING LAWS"). Borrower shall provide
information as Lender may require from time to time to permit Lender to satisfy
its obligations under the OFAC Rules and/or the Anti-Money Laundering Laws.
Borrower shall immediately notify Lender if to Borrower's actual knowledge
(after commercially reasonable due diligence and inquiry) any Tenant becomes a
Prohibited Person or (A) is convicted of, (B) pleads nolo contendere to, (C) is
indicted on, or (D) is
35
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. In addition to the foregoing, Borrower agrees to
indemnify, defend and hold harmless Lender for any actual Losses suffered or
incurred (as applicable) by Lender if Borrower does not comply with this Section
4.1.36 or any of the provisions and requirements of the OFAC Rules, BSA and/or
any Anti-Money Laundering Laws.
Section 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that all of the
representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
BORROWER COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS. From the Closing Date and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Mortgage encumbering the
Property (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises and comply with all Legal Requirements applicable to it and the
Property. Borrower shall not commit, nor shall Borrower permit any other Person
in occupancy of or involved with the operation or use of the Property to commit,
any act or omission affording the federal government or any state or local
government the right of forfeiture 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 hereby covenants and agrees not to commit, permit or
suffer to exist any act or omission affording such right of forfeiture. Borrower
shall at all times maintain, preserve and protect all its franchises and trade
names and preserve all the remainder of its property used or useful in the
conduct of its business and shall keep the Property in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as more fully provided in the Mortgage. Borrower shall keep the Property
insured at all times by financially sound and reputable insurers, to such extent
and against such risks, and maintain liability and such other insurance, as is
more fully provided in this Agreement. Borrower shall operate, or cause the
tenant to operate, any Property that is the subject of an O&M Agreement (if any)
in accordance with the terms and provisions thereof in all material respects.
After prior written, notice to Lender, Borrower, at its own expense, may contest
by appropriate legal proceeding promptly initiated and conducted in good faith
and with due diligence, the validity of any Legal Requirement, the applicability
of any Legal Requirement to Borrower or the Property or any alleged violation of
any Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii) intentionally omitted; (iii) such
36
proceeding shall be permitted under and be conducted in accordance with the
provisions of any instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iv) the Property
or any part thereof or interest therein will not be in danger of being sold,
forfeited, terminated, cancelled or lost; (v) Borrower shall promptly upon final
determination thereof comply with any such Legal Requirement determined to be
valid or applicable or cure any violation of any Legal Requirement; (vi) such
proceeding shall suspend the enforcement of the contested Legal Requirement
against Borrower or the Property; and (vii) Borrower shall furnish such security
as may be required in the proceeding, or as may be requested by Lender, to
insure compliance with such Legal Requirement, together with all interest and
penalties payable in connection therewith. Lender may apply any such security,
as necessary to cause compliance with such Legal Requirement at any time when,
in the reasonable judgment of Lender, the validity, applicability or violation
of such Legal Requirement is finally established or the Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall pay or cause to be
paid 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 to the appropriate
taxing authority Taxes shall be suspended for so long as Borrower complies with
the terms and provisions of Section 7.2 hereof. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then delinquent no later than ten
(10) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid (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 7.2 hereof). If Borrower pays
or causes to be paid all Taxes and Other Charges and provides a copy of the
receipt evidencing the payment thereof to Lender, then Lender shall reimburse
Borrower, provided that there are then sufficient proceeds in the Tax and
Insurance Escrow Fund and provided that the Taxes are being paid pursuant to
Section 7.2. Upon written request of Borrower, if Lender has paid such Taxes
pursuant to Section 7.2 hereof, Lender shall provide Borrower with evidence that
such Taxes have been paid. Borrower shall not suffer and shall promptly cause to
be paid and discharged any Lien or charge whatsoever which may be or become a
Lien or charge against the Property, and shall promptly pay for all utility
services provided to the Property. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes or Other
Charges, provided that (i) Borrower is permitted to do so under the provisions
of any mortgage or deed of trust superior in lien to the Mortgage; (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 statutes, laws and ordinances; (iii) the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled 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 as may be
37
reasonably requested by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash deposit or part thereof held by Lender to the claimant entitled
thereto at any time when, in the reasonable judgment of Lender, the entitlement
of such claimant is established.
5.1.3 LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect Borrower's condition
(financial or otherwise) or business or the Property.
5.1.4 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon reasonable advance notice, subject to the
rights of Tenants under their respective Leases.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
any material adverse change in Borrower's condition, financial or otherwise, or
of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.8 INSURANCE BENEFITS. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any 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 attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property or any part thereof) out of such Insurance Proceeds.
5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
and expense:
(a) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each, and
every other document, certificate, agreement and instrument required to be
furnished by Borrower pursuant to the terms of the Loan Documents or reasonably
requested by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended, to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
38
(c) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan Documents, as
Lender shall reasonably require from time to time.
5.1.10 INTENTIONALLY OMITTED
5.1.11 Financial Reporting. (a) Borrower will keep and maintain or
will cause to be kept and maintained on a Fiscal Year basis, in accordance with
the requirements for a Special Purpose Entity set forth above, proper and
accurate books, records and accounts reflecting all of the financial affairs of
Borrower and all items of income and expense in connection with the operation on
an individual basis of the Property. Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence and during the continuance
of an Event of Default, Borrower shall pay any costs and expenses incurred by
Lender to examine Borrower's accounting records with respect to the Property, as
Lender shall reasonably determine to be necessary or appropriate in the
protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within ninety (90)
days following the end of each Fiscal Year of Borrower, either (i) a complete
copy of Borrower's annual financial statements audited by an accounting firm or
other independent certified public accountant reasonably acceptable to Lender in
accordance with the requirements for a Special Purpose Entity set forth above,
or (ii) a consolidated and annotated financial statement of Borrower and General
Partner (as applicable), audited by an accounting firm or other independent
certified public accountant reasonably acceptable to Lender in accordance with
the requirements for a Special Purpose Entity set forth above, together with
unaudited financial statements relating to the Borrower and the Property. Such
financial statements for the Property for such Fiscal Year and shall contain
statements of profit and loss for Borrower and the Property and a balance sheet
for Borrower. Such statements shall set forth the financial condition and the
results of operations for the Property for such Fiscal Year, and shall include,
but not be limited to, amounts representing annual Net Cash Flow, Net Operating
Income, Gross Income from Operations and Operating Expenses. Borrower's annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior Fiscal
Year, (ii) a certificate executed by the chief financial officer of Borrower or
General Partner, as applicable, stating that each such annual financial
statement presents fairly the financial condition and the results of operations
of Borrower and the Property being reported upon and has been prepared in
accordance with accounting principles reasonably acceptable to Lender,
consistently applied, (iii) an unqualified opinion of an accounting firm or
other independent certified public accountant reasonably acceptable to Lender,
(iv) a certified rent roll containing current rent, lease expiration dates and
the square footage occupied by each tenant; (v) a schedule audited by such
independent certified public accountant reconciling Net Operating Income to Net
Cash Flow (the "NET CASH FLOW SCHEDULE"), which shall itemize all adjustments
made to Net Operating Income to arrive at Net Cash Flow deemed material by such
independent certified public accountant. Together with Borrower's annual
financial statements, Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof whether
39
there exists an event or circumstance which constitutes a Default or Event of
Default under the Loan Documents executed and delivered by, or applicable to,
Borrower, and if such Default or Event of Default exists, the nature thereof,
the period of tune it has existed and the action then being taken to remedy the
same.
(c) Borrower will furnish, or cause to be furnished, to Lender
on or before forty five (45) days after the end of each calendar quarter the
following items, accompanied by a certificate of the chief financial officer of
Borrower or General Partner, as applicable, stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Property (subject to normal
year-end adjustments) as applicable: (i) a rent roll for the subject month
accompanied by an Officer's Certificate with respect thereto; (ii) quarterly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar quarter, noting Net Operating Income, Gross Income from
Operations, and Operating Expenses (not including any contributions to the
Replacement Reserve Fund, and other information necessary and sufficient to
fairly represent the financial position and results of operation of the Property
during such calendar month, and containing a comparison of budgeted income and
expenses and the actual income and expenses together with a detailed explanation
of any variances of five percent (5%) or more between budgeted and actual
amounts for such periods, all in form satisfactory to Lender; (iii) a
calculation reflecting the annual Debt Service Coverage Ratio for the
immediately preceding twelve (12) month period as of the last day of such month
accompanied by an Officer's Certificate with respect thereto; and (iv) a Net
Cash Flow Schedule (such Net Cash Flow for the Borrower may be unaudited if it
is certified by an officer of the Borrower). In addition, such certificate shall
also be accompanied by a certificate of the chief financial officer of Borrower
or General Partner stating that the representations and warranties of Borrower
set forth in Section 4.1.30(a) are true and correct as of the date of such
certificate.
(d) INTENTIONALLY DELETED.
(e) Borrower shall furnish to Lender, within ten (10) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Property and
the financial affairs of Borrower as may be reasonably requested by Lender.
(f) Borrower shall furnish to Lender, within ten (10) Business
Days after Lender's request (or as soon thereafter as may be reasonably
possible), financial and sales information from any Tenant designated by Lender
(to the extent such financial and sales information is required to be provided
under the applicable Lease and same is received by Borrower after request
therefor).
(g) Borrower will cause Indemnitor to furnish to Lender annually,
within one hundred twenty (120) days following the end of each Fiscal Year of
Indemnitor, Indemnitor's 10K and/or 10Q filings.
(h) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) on a
diskette, and (iii) if requested by Lender and within the capabilities of
Borrower's data systems without change or modification
40
thereto, in electronic form and prepared using a Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet
program and saved as word processing files).
5.1.12 BUSINESS AND OPERATIONS. Borrower will continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property. Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are required
for the ownership, maintenance, management and operation of the Property.
5.1.13 TITLE TO THE PROPERTY. Borrower will warrant and defend (a)
the title to the Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Liens of the Mortgage and the Assignment of Leases on the
Property, subject only to Liens permitted hereunder (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that the Mortgage
encumbering the Property is foreclosed in whole or in part or that the Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
the Mortgage encumbering the Property in which proceeding Lender is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or any of its constituent Persons or an
assignment by Borrower or any of its constituent Persons for the benefit of its
creditors, Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all costs of collection and defense, including reasonable
attorneys' fees and costs, incurred by Lender or Borrower in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, together with all required service or use taxes.
5.1.15 ESTOPPEL STATEMENT. (a) After request by Lender, Borrower
shall within ten (10) days furnish Lender with a statement, duly acknowledged
and certified, setting forth (i) the amount of the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the applicable
interest rate of the Note, (iv) the date installments of interest and/or
principal were last paid, (v) any offsets or defenses to the payment of the
Debt, if any, and (vi) that the Note, this Agreement, the Mortgage and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
(b) Borrower shall use commercially reasonable efforts to deliver
to Lender upon request, tenant estoppel certificates from each commercial tenant
leasing space at the Property in form and substance reasonably satisfactory to
Lender provided that Borrower shall not be required to deliver such certificates
more frequently than one (1) time in any calendar year.
41
(c) Within thirty (30) days of request by Borrower, Lender shall
deliver to Borrower a statement setting forth the items described at (a)(i),
(ii), (iii) and (iv) of this Section 5.1.15.
5.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.4.
5.1.17 PERFORMANCE BY BORROWER. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and shall
not enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
5.1.18 CONFIRMATION OF REPRESENTATIONS. Borrower shall deliver, in
connection with any Securitization, (a) one or more Officer's Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization, and (b)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower and its
member as of the date of the Securitization.
5.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (a) with any other real property
constituting a tax lot separate from the Property, and (b) which constitutes
real property with any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such real property portion of the Property.
5.1.20 LEASING MATTERS. Any Leases with respect to the Property
written after the Closing Date for more than the Relevant Leasing Threshold
square footage shall be subject to the prior written approval of Lender, which
approval may be given or withheld in the sole discretion of Lender. Lender shall
approve or disapprove any such Lease within ten (10) Business Days of Lender's
receipt of a final execution draft of such Lease (including all exhibits,
schedules, supplements, addenda or other agreements relating thereto) and a
written notice from Borrower requesting Lender's approval to such Lease, and
such Lease shall be deemed approved, if Lender does not disapprove such Lease
within said ten (10) Business Day period provided such written notice
conspicuously states, in large bold type, that "PURSUANT TO SECTION 5.1.20 OF
THE
LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT
RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER'S RECEIPT OF
SUCH LEASE AND WRITTEN NOTICE". Borrower shall furnish Lender with executed
copies of all Leases. All renewals of Leases and all proposed Leases shall
provide for rental rates comparable to existing local market rates (unless such
rental rates are otherwise set forth in the Leases executed prior to the Closing
Date). All proposed Leases shall be on commercially reasonable terms and shall
not contain any terms which would materially affect Lender's rights under the
Loan Documents. All Leases executed after the Closing Date shall provide that
they are subordinate to the Mortgage encumbering the Property and that the
tenant thereunder agrees to attorn to Lender or any purchaser at a sale by
42
foreclosure or power of sale. Borrower (i) shall observe and perform the
obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce the terms, covenants and conditions
contained in the Leases upon the part of the tenant thereunder to be observed or
performed in a commercially reasonable manner and in a manner not to impair the
value of the Property involved except that no termination by Borrower or
acceptance of surrender by a tenant of any Lease shall be permitted unless by
reason of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Property; PROVIDED, HOWEVER, that no such termination
or surrender of any Lease covering more than the Relevant Leasing Threshold will
be permitted without the written consent of Lender which consent may be withheld
in the sole discretion of Lender; (iii) shall not collect any of the rents more
than one (1) month in advance (other than security deposits); (iv) shall not
execute any other assignment of lessor's interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of
the Loan Documents without the prior written consent of Lender, which consent
may be withheld in the sole discretion of Lender; and (vi) shall execute and
deliver at the request of Lender all such further assurances, confirmations and
assignment in connection with the Leases as Lender shall from time to time
reasonably require. Notwithstanding the foregoing, Borrower may, without the
prior written consent of Lender, terminate any Lease which demises less than the
Relevant Leasing Threshold under any of the following circumstances: (i) the
tenant under said Lease is in default beyond any applicable grace and cure
period, and Borrower has the right to terminate such Lease; (ii) such
termination is permitted by the terms of the Lease in question and Borrower has
secured an obligation from a third party to lease the space under the Lease to
be terminated at a rental equal to or higher than the rental due under the Lease
to be terminated; and (iii) if the tenant under the Lease to be terminated, has
executed a right under said Lease to terminate its lease upon payment of a
termination fee to Borrower, and has in fact terminated its lease and paid said
fee, Borrower may accept said termination.
5.1.21 ALTERATIONS. Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender's prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower's financial
condition, the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender's consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower's financial condition, the value of the Property or the Net Operating
Income, provided that such alterations are made in connection with (a) tenant
improvement work performed pursuant to the terms of any Lease executed on or
before the Closing Date, (b) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, (c) alterations performed in connection with the restoration of
the Property after the occurrence of a casualty in accordance with the terms and
provisions of this Agreement or (d) any structural alteration which costs less
than $100,000.00 in the aggregate for all components thereof which constitute
such alteration or any non-structural alteration which costs less than
$250,000.00 in the aggregate for all components thereof which constitute such
alteration. If the total unpaid amounts due and payable with respect to
alterations to the Improvements at the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) shall at any time equal or
exceed $500,000.00 (the "THRESHOLD AMOUNT"),
43
Borrower, upon Lender's request, shall promptly deliver to Lender as security
for the payment of such amounts and as additional security for Borrower's
obligations under the Loan Documents any of the following: (A) cash, (B) U.S.
Obligations, (C) other securities having a rating acceptable to Lender and that
the applicable Rating Agencies have confirmed in writing will not, in and of
itself, result in a downgrade, withdrawal or qualification of the initial, or,
if higher, then current ratings assigned in connection with any Securitization,
or (D) a completion bond or letter of credit issued by a financial institution
having a rating by Standard & Poor's Ratings Group of not less than A-1+ if the
term of such bond or letter of credit is no longer than three (3) months or, if
such term is in excess of three (3) months, issued by a financial institution
having a rating that is acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization. Such security
shall be in an amount equal to the excess of the total unpaid amounts with
respect to alterations to the Improvements on the Property (other than such
amounts to be paid or reimbursed by tenants under the Leases) over the Threshold
Amount and, if cash, may be applied from time to time, at the option of
Borrower, to pay for such alterations. At the option of Lender, following the
occurrence and during the continuance of an Event of Default, Lender may
terminate any of the alterations and use the deposit to restore the Property to
the extent necessary to prevent any material adverse effect on the value of the
Property.
5.1.22 INTENTIONALLY OMITTED.
5.1.23 INTENTIONALLY OMITTED.
Section 5.2 NEGATIVE COVENANTS. From the Closing Date until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgage encumbering the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
5.2.1 OPERATION OF PROPERTY. Borrower shall not, without the prior
consent of Lender, terminate the Management Agreement or otherwise replace the
Manager or enter into any other management agreement with respect to the
Property unless the Manager is in default thereunder beyond any applicable grace
or cure period, in which event no consent by Lender shall be required. Lender
agrees that its consent will not be unreasonably withheld, delayed or
conditioned provided that the Person chosen by Borrower as the replacement
Manager is a Qualifying Manager and provided further that Borrower shall deliver
an acceptable non-consolidation opinion covering such replacement Manager if
such Person was not covered by such opinion delivered at the closing of the
Loan.
5.2.2 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:
(i) Permitted Encumbrances;
44
(ii) Liens created by or related to Indebtedness permitted pursuant
to the Loan Documents; and
(iii) Liens for Taxes or Other Charges not yet due (or that Borrower
is contesting in accordance with the terms of Section 5.1.2 hereof).
5.2.3 DISSOLUTION. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Property, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents or
its qualification and good standing in any jurisdiction or (e) cause the General
Partner to (i) dissolve, wind up or liquidate or take any action, or omit to
take an action, as a result of which the General Partner would be dissolved,
wound up or liquidated in whole or in part, or (ii) amend, modify, waive or
terminate the certificate of limited partnership or partnership agreement of the
General Partner, in each case, without obtaining the prior written consent of
Lender or Lender's designee.
5.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any line of
business other than the ownership and operation of the Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
5.2.6 AFFILIATE TRANSACTIONS. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the partners
of Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party.
5.2.7 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.
5.2.8 ASSETS. Borrower shall not purchase or own any properties
other than the Property owned by Borrower as of the Closing Date as reflected in
the applicable Title Insurance Policy.
5.2.9 DEBT. Borrower shall not create, incur or assume any
Indebtedness other than the Debt except to the extent expressly permitted
hereby.
45
5.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property with (a) any other real property
constituting a tax lot separate from the Property, or (b) 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 the Property.
5.2.11 INTENTIONALLY OMITTED.
5.2.12 ERISA. (a) Borrower shall not engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not and does not maintain an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within
the meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding class
of equity interests in Borrower are held by "benefit plan investors" within
the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. Section 2510.3-101(c) or
(e).
5.2.13 TRANSFERS. Unless such action is permitted by the provisions
of this Section 5.2.13, Borrower agrees that it will not (i) sell, assign,
convey, transfer or otherwise dispose of its interests in the Property or any
part thereof, (ii) permit any owner, directly or indirectly, of an ownership
interest in the Property, to transfer such interest, whether by transfer of
stock or other interest in Borrower or any entity, or otherwise, (iii) incur
Indebtedness (other than the Indebtedness permitted pursuant to the terms of
this Agreement), (iv) mortgage, hypothecate or otherwise encumber or grant a
security interest in the Property or any part thereof, (v) sell, assign, convey,
transfer, mortgage, encumber, grant a security interest in, or otherwise dispose
of any direct or indirect ownership interest in Borrower, or permit any owner of
an interest in Borrower to do the same, or (vi) file a declaration of
condominium with respect to the Property (any of the foregoing transactions, a
"TRANSFER"). For purposes hereof, a "Transfer" shall not include (A) any
issuance, sale or transfer of interests in Inland Western Retail Real Estate
Trust, Inc., (B) transfer by devise or descent or by operation of law upon the
death of a partner or member of Borrower, and (C) a sale, transfer or
hypothecation of a partnership or membership interest in Borrower, whichever the
case may be, by the current partner(s) or member(s), as applicable, to an
immediate family member (i.e., parents, spouses,
46
siblings, children or grandchildren) of such partner or member (or a trust for
the benefit of any such persons).
(a) Lender shall not withhold its consent to a Transfer of the
Property, provided that the following conditions are satisfied:
(1) the transferee of the Property shall be a Special Purpose
Entity (the "TRANSFEREE") which at the time of such transfer
will be in compliance with the covenants contained in Section
5.1.1 and the representations contained in Section 4.1.30
hereof and which shall have assumed in writing (subject to the
terms of Section 9.4 hereof) and agreed to comply with all the
terms, covenants and conditions set forth in this
Loan
Agreement and the other Loan Documents, expressly including
the covenants contained in Section 5.1.1 and the
representations contained in 4.1.30 hereof;
(2) if requested by Lender, Borrower shall deliver confirmation in
writing from the Rating Agencies that such proposed Transfer
will not cause a downgrading, withdrawal or qualification of
the then current rating of any securities issued pursuant to
such Securitization;
(3) if Manager does not act as manager of the transferred Property
then the manager of the Property must be a Qualifying Manager;
(4) no Event of Default shall have occurred and be continuing;
(5) if a substantive non-consolidation opinion was required in
connection with the initial Loan closing, Borrower shall
deliver an Additional Insolvency Opinion, and if required by a
Rating Agency, a fraudulent conveyance opinion which in each
case may be relied upon by the holder of the Note, the Ratings
Agencies and their respective counsel, agents and
representatives with respect to the proposed transaction,
including the Transferee, which opinion shall be acceptable to
Lender in its reasonable discretion;
(6) Borrower shall have paid (A) an assumption fee equal to one
percent (1.0%) of the then outstanding principal balance of
the Loan, and (B) the reasonable and customary third-party
expenses (including reasonable attorneys' fees and
disbursements) actually incurred by Lender in connection with
such Transfer; PROVIDED, HOWEVER, no assumption fee shall be
required for a Transfer of the Property to a Transferee
acceptable to Lender in connection with a joint venture
between Inland Western Retail Real Estate Trust, Inc. and an
institution acceptable to Lender provided Inland Western
Retail Real Estate Trust, Inc., or an Affiliate wholly-owned
(directly or indirectly) by Inland Western Retail Real Estate
Trust, Inc., owns at least twenty percent (20%) of the
ownership interests in such Transferee and for which Inland
Western Retail Real Estate Trust,
47
Inc., or an Affiliate wholly-owned (directly or indirectly) by
Inland Western Retail Real Estate Trust, Inc., is the managing
entity and otherwise maintains operational and managerial
control of such Transferee, provided that Borrower shall pay
all of Lender's reasonable and customary third-party expenses
(including reasonable attorneys' fees and disbursements)
actually incurred by Lender in connection with such Transfer
and a processing fee of $5,000.
Lender shall approve or disapprove any proposed Transfer governed by this
Section 5.2.13(a) within thirty (30) days of Lender's receipt of a written
notice from Borrower requesting Lender's approval, provided such notice includes
all information necessary to make such decision, and further provided that such
written notice from Borrower shall conspicuously state, in large bold type, that
"PURSUANT TO SECTION 5.2.13 OF THE LOAN AGREEMENT, A RESPONSE IS REQUIRED
WITHIN THIRTY (30) DAYS OF LENDER'S RECEIPT OF THIS WRITTEN NOTICE". If Lender
fails to disapprove any such matter within such period, Borrower shall provide a
second written notice requesting approval, which written notice shall
conspicuously state, in large bold type, that "PURSUANT TO SECTION 5.2.13 OF THE
LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF LENDER
DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) DAYS OF LENDER'S RECEIPT OF
THIS WRITTEN NOTICE". Thereafter, if Lender does not disapprove such matter
within said ten (10) day period such matter shall be deemed approved.
(b) Lender shall not withhold its consent to, and shall not charge
an assumption fee in connection with, (1) a Transfer of up to, in the aggregate,
forty-nine percent (49%) of the direct or indirect ownership interests in
Borrower, or (2) a Transfer of greater than forty-nine percent (49%) of the
direct or indirect ownership interest in Borrower, PROVIDED that (A) such
transfer is to a Qualified Entity (as defined below), and (B) Borrower shall pay
all of Lender's reasonable and customary third-party expenses (including
reasonable attorneys' fees and disbursements) actually incurred by Lender in
connection with such Transfer and a processing fee of $5,000. For purposes of
this Agreement, a "QUALIFIED ENTITY" shall mean an entity (x) with a net worth
of $200,000,000 or more, (y) with sufficient experience (determined by Lender in
its reasonable discretion) in the ownership and management of properties similar
to the Property, and (z) which owns or manages retail properties containing at
least 1,000,000 square feet of gross leasable area. If a substantive
non-consolidation opinion was required in connection with the initial Loan
closing, Borrower shall deliver a substantive non-consolidation opinion with
respect to any party not now owning more than 49% of the ownership interests in
Borrower acquiring more than 49% of the ownership interests in Borrower.
(c) Notwithstanding anything in this Section 5.2.13 to the
contrary, Borrower shall be permitted to Transfer the entire Property in a
single transaction to one newly-formed Special Purpose Entity which shall be
wholly-owned subsidiary of Inland Western Retail Real Estate Trust, Inc.
("PERMITTED AFFILIATE TRANSFEREE") which shall be approved by Lender in its
reasonable discretion ("PERMITTED AFFILIATE TRANSFER"), provided (1) no Event of
Default shall have occurred and be continuing, (2) the creditworthiness of
Inland Western Retail Real Estate Trust, Inc., as applicable, has not
deteriorated, in the sole discretion of Lender, from the Closing Date to the
date of the proposed Transfer, and (3) Borrower shall have paid all reasonable
and
48
customary third party expenses (including reasonable attorneys' fees and
disbursements) actually incurred by Lender in connection with such Transfer (but
not any assumption or processing fee).
(d) Borrower, without the consent of Lender, may grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for access, parking, water and sewer lines, telephone and telegraph
lines, electric lines and other utilities or for other similar purposes,
provided that no transfer, conveyance or encumbrance shall materially impair the
utility and operation of the Property or materially adversely affect the value
of the Property or the Net Operating Income of the Property. If Borrower shall
receive any consideration in connection with any of said described transfers or
conveyances, Borrower shall have the right to use any such proceeds in
connection with any alterations performed in connection therewith, or required
thereby. In connection with any transfer, conveyance or encumbrance permitted
above, the Lender shall execute and deliver any instrument reasonably necessary
or appropriate to evidence its consent to said action or to subordinate the Lien
of the Mortgage to such easements, restrictions, covenants, reservations and
rights of way or other similar grants upon receipt by the Lender of: (A) a copy
of the instrument of transfer; and (B) an Officer's Certificate stating with
respect to any transfer described above, that such transfer does not materially
impair the utility and operation of the Property or materially reduce the value
of the Property or the Net Operating Income of the Property.
ARTICLE VI
INSURANCE; CASUALTY; CONDEMNATION
Section 6.1 INSURANCE.
(a) Borrower shall obtain and maintain insurance for Borrower and
the Property providing at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent
(100%) of the "Full Replacement Cost," which for purposes of this Agreement
shall mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to
the Improvements and Personal Property waiving all co-insurance provisions;
(C) providing for no deductible in excess of Twenty-Five Thousand and
No/100 Dollars ($25,000.00) for all such insurance coverage; and (D)
containing an "Ordinance or Law Coverage" or "Enforcement" endorsement if
any of the Improvements or the use of the Property shall at any time
constitute legal non-conforming structures or uses. In addition, Borrower
shall obtain: (y) if any portion of the Improvements is currently or at any
time in the future located in a federally designated "special flood hazard
area", flood hazard insurance in an amount equal to the lesser of (1) the
outstanding principal balance of the Note or (2) the maximum amount of such
insurance available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended or such greater amount as Lender
shall require; and (z) earthquake
49
insurance in amounts and in form and substance satisfactory to Lender in
the event the Property is located in an area with a high degree of seismic
activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk
insurance 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, such insurance (A) to be on the so-called
"occurrence" form with One Million and No/100 Dollars ($1,000,000.00)
coverage per occurrence, Two Million and No/100 Dollars ($2,000,000.00)
coverage in the aggregate and a combined limit, including umbrella
coverage, of not less than Five Million and No/100 Dollars ($5,000,000.00);
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the following
hazards: (1) premises and operations; (2) products and completed operations
on an "if any" basis; (3) independent contractors; (4) blanket contractual
liability for all legal contracts; and (5) contractual liability covering
the indemnities contained in Article 9 of the Mortgage to the extent the
same is available;
(iii) business income insurance (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) covering rental losses or business interruption,
as may be applicable, for a period of at least twelve (12) months after the
date of the casualty; and (D) in an annual amount equal to (100%) of the
rents or estimated gross revenues from the operation of the Property (as
reduced to reflect expenses not incurred during a period of Restoration).
The amount of such business income insurance shall be determined prior to
the date hereof and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the
succeeding twelve (12) month period. 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 and the other Loan Documents except to
the extent such amounts are actually paid out of the proceeds of such
business income insurance;
(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 all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
State;
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(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 liability insurance in an amount not less than Five
Million and No/100 Dollars ($5,000,000.00) per occurrence on terms
consistent with the commercial general liability insurance policy required
under subsection (ii) above;
(viii) automobile insurance to cover all owned or non-owned
automobiles in an amount not less than One Million and No/100 Dollars
($1,000,000.00) per occurrence;
(ix) if any of the policies of insurance covering the risks
required to be covered under subsections (i) through (vii) above contains
an exclusion from coverage for acts of terrorism, Borrower shall obtain and
maintain a separate policy providing such coverages in the event of any act
of terrorism, provided such coverage is commercially available for
properties similar to the Property and located in or around the region in
which the Property is located. Notwithstanding the foregoing, Borrower
shall not be required to obtain such a policy, provided (I) Borrower
confirms to Lender, in writing, that it shall protect and hold Lender
harmless from any losses associated with such risks by, among other things,
either (A) depositing with Lender sums sufficient to pay for all uninsured
costs related to a Restoration of the Property following any act of
terrorism (which sum shall be treated as a Net Proceeds Deficiency), or (B)
provided such act of terrorism occurs on or after the Permitted Prepayment
Date, prepaying the Loan in accordance with the terms hereof; (II) Inland
Western Retail Real Estate Trust, Inc. ("TERRORISM INSURANCE GUARANTOR")
executes a guaranty, in form and substance satisfactory to Lender,
guaranteeing in the event of any act of terrorism, payment to Lender of any
sums that Borrower is obligated to pay to Lender under clause (I) above
(which shall be applied in accordance with Section 6.4 hereof) and (III)
Terrorism Insurance Guarantor maintains a net worth of at least
$400,000,000 (as determined by such entity's most recent audited financial
statements), such entity maintains a direct or indirect ownership interest
in Borrower, and the aggregate loan to value ratio (as determined by
Lender) ("LTV") for all properties on which such entity has a direct or
indirect ownership interest shall not exceed 55%, however, Terrorism
Insurance Guarantor may exceed the 55% LTV for a period not to exceed six
(6) months out of any twelve (12) month period either 1) during the time
period when Terrorism Insurance Guarantor is offering securities to the
public, or 2) when in the business judgment of Terrorism Insurance
Guarantor, exceeding an LTV of 55% is necessary given existing
circumstances of the credit environment, but in no event shall the LTV
exceed 70%.
(x) 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 which at the time
are commonly insured against for property similar to the Property located
in or around the region in which the Property is located.
(b) All insurance provided for in Section 6.1(a) 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, deductible, loss
51
payees and insureds. The Policies shall be issued by financially sound and
responsible insurance companies authorized to do business in the State and
having a rating of "A:X" or better in the current Best's Insurance Reports and a
claims paying ability rating of "AA" or better by at least two (2) of the
Rating Agencies including, (i) Standard & Poor's Ratings Group, and (ii) ▇▇▇▇▇'▇
Investors Services, Inc. if ▇▇▇▇▇'▇ Investors Service, Inc. is rating the
Securities. The Policies described in Section 6.1 (other than those strictly
limited to liability protection) shall designate Lender as loss payee. Not less
than thirty (30) days prior to the expiration dates of the Policies theretofore
furnished to Lender, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the "INSURANCE PREMIUMS"), shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to
the Property the amount of coverage from time to time required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of Section 6.1 (a).
(d) All Policies of insurance provided for or contemplated by
Section 6.1 (a), except for the Policy referenced in Section 6.1(a)(v), shall
name Borrower, or the Tenant, as the insured and Lender as the additional
insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 6.1 (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 Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least thirty
(30) days' written notice to Lender and any other party named therein as an
additional insured;
(iii) the issuers thereof shall give written notice to Lender if the
Policy has not been renewed fifteen (15) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, after ten (10) Business Days written notice to Borrower, to take
such action as Lender deems necessary to protect its interest in the Property,
including, without limitation, the obtaining of such insurance coverage as
Lender in its sole discretion deems appropriate. All premiums incurred by Lender
in connection with such action or in obtaining such insurance and keeping it in
effect shall be paid
52
by Borrower to Lender upon demand and, until paid, shall be secured by the
Mortgage and shall bear interest at the Default Rate. If Borrower fails in so
insuring the Property or in so assigning and delivering the Policies, Lender
may, at its option, obtain such insurance using such carriers and agencies as
Lender shall elect from year to year and pay the premiums therefor, and Borrower
will reimburse Lender for any premium so paid, with interest thereon as stated
in the Note from the time of payment, on demand, and the amount so owning to
Lender shall be secured by the Mortgage. The insurance obtained by Lender may,
but need not, protect Borrower's interest and the coverage that Lender purchases
may not pay any claim that Borrower makes or any claim that is made against
Borrower in connection with the Property.
Section 6.2 CASUALTY. If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a "CASUALTY") Borrower (a) shall
give to Lender prompt notice of such damage reasonably estimated by Borrower to
cost more than One Hundred Thousand Dollars ($100,000.00) to repair, and (b)
shall promptly commence and diligently prosecute 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 fire or other casualty, with such
alterations as may be reasonably approved by Lender (a "RESTORATION") and
otherwise in accordance with Section 6.4. 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.
Section 6.3 CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any proceeding for the Condemnation of
the Property and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If 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 6.4. 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 6.4 RESTORATION. The following provisions shall apply in
connection with the Restoration of the Property:
53
(a) If the Net Proceeds shall be less than Relevant Restoration
Threshold and the costs of completing the Restoration shall be less than the
Relevant Restoration Threshold, the Net Proceeds will be disbursed by Lender to
Borrower upon receipt, provided that all of the conditions set forth in clauses
(A), (E), (F), (G), (H), (J) and (L) of Section 6.4(b)(i) below are met and
Borrower delivers to Lender a written undertaking to expeditiously commence and
to satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than the Relevant
Restoration Threshold or the costs of completing the Restoration is equal to or
greater than the Relevant Restoration Threshold, then in either case, Lender
shall make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 6.4(b). The term "NET PROCEEDS" for purposes of this
Section 6.4 shall mean: (x) the net amount of all insurance proceeds received by
Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and (viii) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same ("INSURANCE PROCEEDS"), or (y) the net amount of the Award, after deduction
of its reasonable costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting same ("CONDEMNATION PROCEEDS"), whichever
the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, and (x) less than twenty-five percent (25%) of the
total floor area of the Improvements on the Property has been
damaged, destroyed or rendered unusable as a result of such
fire or other casualty, or (y) Borrower is required under a
Lease exceeding the Relevant Leasing Threshold to use the Net
Proceeds for the restoration of the Property, or (2) in the
event the Net Proceeds are Condemnation Proceeds, and (x) less
than ten percent (10%) of the land constituting the Property
is taken, and such land is located along the perimeter or
periphery of the Property, and no portion of the Improvements
is located on such land, or (y) Borrower is required under a
Lease exceeding the Relevant Leasing Threshold to use the Net
Procceds for the restoration of the Property;
(C) Leases demising in the aggregate a percentage amount
equal to or greater than the Rentable Space Percentage of the
total rentable space in the Property which has been demised
under executed and delivered Leases in effect as of the date
of the occurrence of such fire or other casualty or taking,
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 fire or other
casualty or taking, whichever the case may be, and will make
all necessary repairs and restorations thereto at their sole
cost and expense. The term "RENTABLE
54
SPACE PERCENTAGE" shall mean (x) in the event the Net Proceeds
are Insurance Proceeds, a percentage amount equal to fifty
percent (50%) and (y) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to Fifty
percent (50%);
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than ninety (90)
days after such damage or destruction or taking, whichever the
case may be, occurs) and shall diligently pursue the same to
satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Property as a result of the occurrence of any such fire
or other casualty or taking, whichever the case may be, will
be covered out of (1) the Net. Proceeds, (2) the insurance
coverage referred to in Section 6.l(a)(iii), if applicable, or
(3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration will
be completed on or before the earliest to occur of (1) the
Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases, (3) such time as may
be required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other
casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable or (4) the
expiration of the insurance coverage referred to in Section
6.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations
provided, however, that compliance with such zoning laws,
ordinances, rules and regulations (including, without
limitation, parking requirements) will not require restoration
of the Improvements or the Property to a size, condition, or
configuration materially different than that which existed
immediately prior to such Casualty or taking;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable governmental laws, rules and
regulations (including, without limitation, all applicable
environmental laws);
(I) such fire or other casualty or taking, as
applicable, does not result in the loss of access to the
Property or the related Improvements;
(J) the Debt Service Coverage Ratio, after giving effect
to the Restoration, shall be equal to or greater than
2.71:1.0;
55
(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 should be consistent
with restoration budgets of similar retail properties then
owned and operated by nationally recognized owners and
operators of retail properties located in the areas in which
the Property is located; and
(L) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are sufficient in
Lender's discretion to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender in an interest
bearing account and, until disbursed in accordance with the provisions of
this Section 6.4(b), shall constitute additional security for the Debt and
other obligations under the Loan Documents. The Net Proceeds shall be
disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory
to Lender that (A) all materials installed and work and labor performed to
be paid for out of the requested disbursement in connection with the
Restoration have been performed, and (B) there exist no notices of
pendency, stop orders, mechanic's or materialman's liens or notices of
intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the
Title Insurance Policy.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all respects
by Lender and by an independent consulting engineer selected by Lender (the
"CASUALTY CONSULTANT"), such review and acceptance not to be unreasonably
withheld or delayed. Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained
in connection with the Restoration. The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts under which they have been engaged, shall be subject to prior
review and acceptance by Lender and the Casualty Consultant, such review
and acceptance not to be unreasonably withheld or delayed. All costs and
expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable
counsel fees and disbursements and the Casualty Consultant's fees, shall be
paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration, as
certified by the Casualty Consultant, MINUS the Casualty Retainage. The
term "CASUALTY RETAINAGE" shall mean an amount equal to ten percent (10%)
of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the Restoration
has been completed. The Casualty Retainage shall in no event, and
notwithstanding anything to
56
the contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Casualty Retainage shall not be
released until the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
Section 6.4(b) and that all approvals necessary for the re-occupancy and
use of the Property have been obtained from all appropriate governmental
and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid in
full or will be paid in full out of the Casualty Retainage; PROVIDED,
HOWEVER, that Lender will release the portion of the Casualty Retainage
being held with respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of
all sums due to the contractor, subcontractor or materialman as may be
reasonably requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title Insurance
Policy insuring the continued priority of the lien of the Mortgage and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued
a payment or performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation with
the Casualty Consultant, be sufficient to pay in full the balance of the
costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit
the deficiency (the "NET PROCEEDS DEFICIENCY") with Lender before any
further disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on
the same conditions applicable to the disbursement of the Net Proceeds, and
until so disbursed pursuant to this Section 6.4(b) shall constitute
additional security for the Debt and other obligations under the Loan
Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b), and the
receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall
be 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.
57
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 6.4(b)(vii) may 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 (provided no
Event of Default exists, such Borrower shall not be required to pay any
Prepayment Consideration in connection with such payment), or, at the discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate, in its discretion.
(d) In the event of foreclosure of the Mortgage with respect to
the Property, or other transfer of title to the Property in extinguishment in
whole or in part of the Debt all right, title and interest of Borrower in and to
the Policies that are not blanket Policies then in force concerning the Property
and all proceeds payable thereunder shall thereupon vest in the purchaser at
such foreclosure or Lender or other transferee in the event of such other
transfer of title.
(e) Lender shall with reasonable promptness following any Casualty
or Condemnation notify Borrower whether or not Net Proceeds are required to be
made available to Borrower for restoration pursuant to this Section 6.4. All Net
Proceeds not required to be made available for Restoration shall be retained and
applied by Lender in accordance with SECTION 2.3.2(a) hereof (a "NET PROCEEDS
PREPAYMENT"). If such Net Proceeds Prepayment shall be equal to or greater than
Fifteen Million Seven Hundred Thousand and 00/100 Dollars ($15,700,000.00),
Borrower shall have the right to elect to prepay the remaining outstanding
principal balance of the Note (a "CASUALTY/CONDEMNATION PREPAYMENT") in
accordance with SECTION 2.3.2(b) hereof upon satisfaction of the following
conditions: (i) within thirty (30) days following the date of the Net Proceeds
Prepayment, Borrower shall provide Lender with written notice of Borrower's
intention to pay the Note in full, (ii) Borrower shall prepay the Note in
accordance with Section 2.3.2(b) hereof on or before the second Payment Date
occurring following the date of the Net Proceeds Prepayment, and (iii) no Event
of Default shall exist on the date of such Casualty/Condemnation Prepayment.
Notwithstanding anything in Section 6.2 or Section 6.3 to the contrary, Borrower
shall have no obligation to commence Restoration of the Property upon delivery
of the written notice set forth in clause (i) of the preceding sentence (unless
Borrower subsequently shall fail to satisfy the requirement of clause (ii) of
the preceding sentence).
ARTICLE VII
RESERVE FUNDS
Section 7.1 REQUIRED REPAIR FUNDS.
7.1.1 DEPOSITS. Borrower shall perform the repairs at the Property,
if any, as more particularly set forth on SCHEDULE III hereto (such repairs
hereinafter referred to as "REQUIRED REPAIRS") within six (6) months from the
Closing Date (or such longer time as Borrower and Lender may mutually agree to),
or such earlier time as specified on SCHEDULE III, provided that the estimated
cost to complete the Required Repairs is less than One Hundred Thousand and
00/100 Dollars ($100,000.00) in the aggregate. If Borrower has not delivered to
58
Lender evidence reasonably satisfactory to Lender that it has completed all
Required Repairs on or before the date that is six (6) months from the Closing
Date, or such earlier time as specified on SCHEDULE III or if the estimated cost
to complete the Required Repairs is equal to or greater than One Hundred
Thousand and 00/100 Dollars ($100,000.00), Borrower shall deposit with Lender
one hundred twenty five percent (125%) of the estimated cost to complete such
repairs as determined by Lender's structural consultant, if any (less the amount
allocated to the performance of Required Repairs for which evidence of
completion has been delivered to Lender), to perform the Required Repairs for
the Property. Amounts so deposited with Lender, if any, shall be held by Lender
in an interest bearing account. Amounts so deposited, if any, shall hereinafter
be referred to as Borrower's "REQUIRED REPAIR FUND" and the account, if any, in
which such amounts are held shall hereinafter be referred to as Borrower's
"REQUIRED REPAIR ACCOUNT". It shall be an Event of Default under this Agreement
if Borrower does not either (i) does not deposit with Lender the Required Repair
Fund as set forth above, or (ii) complete the Required Repairs at the Property
within nine (9) months from the Closing Date. Upon the occurrence of such an
Event of Default, Lender, at its option, may withdraw all Required Repair Funds
from the Required Repair Account and Lender may apply such funds either to
completion of the Required Repairs at the Property or toward payment of the Debt
in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply Required Repair Funds shall be
in addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.
7.1.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse to
Borrower the Required Repair Funds from the Required Repair Account from time to
time upon satisfaction by Borrower of each of the following conditions: (i)
Borrower shall submit a written request for payment to Lender at least fifteen
(15) days prior to the date on which Borrower requests such payment be made and
specifies the Required Repairs to be paid, (ii) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (iii) Lender shall have
received a certificate from Borrower (A) stating that all Required Repairs at
the Property to be funded by the requested disbursement have been completed in
good and workmanlike manner and in accordance with all applicable federal, state
and local laws, rules and regulations, such certificate to be accompanied by a
copy of any license, permit or other approval by any Governmental Authority
required to commence and/or complete the Required Repairs, (B) identifying each
Person that supplied materials or labor in connection with the Required Repairs
performed at the Property to be funded by the requested disbursement under a
contract in excess of S50,000, and (C) stating that each Person who has supplied
materials or labor in connection with the Required Repairs to be funded by the
requested disbursement has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (iv) at Lender's option, a title
search for the Property indicating that the Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (v) Lender
shall have received such other evidence as Lender shall reasonably request that
the Required Repairs at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to make disbursements from the Required
Repair Account with respect to the Property more than once each calendar month
and such disbursement shall be made only upon satisfaction of each condition
contained in this Section 7.1.2.
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Section 7.2 TAX AND INSURANCE ESCROW FUND. Borrower shall pay to Lender on
each Payment Date (a) one-twelfth of the Taxes that Lender estimates will be
payable during the next ensuing twelve (12) months in order to accumulate with
Lender sufficient funds to pay all such Taxes at least thirty (30) days prior to
their respective due dates and (b) one-twelfth of the Insurance Premiums that
Lender estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies, (said amounts in (a) and (b) above are
hereinafter called the "TAX AND INSURANCE ESCROW FUND"). The Tax and Insurance
Escrow Fund and the payments of interest or principal or both, payable pursuant
to the Note, shall be added together and shall be paid as an aggregate sum by
Borrower to Lender. Lender will apply the Tax and Insurance Escrow Fund to
payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to this Agreement and under the Mortgage. In making any payment
relating to the Tax and Insurance Escrow Fund, Lender may do so according to any
▇▇▇▇, statement or estimate procured from the appropriate public office (with
respect to Taxes) or insurer or agent (with respect to Insurance Premiums) or
from Borrower without inquiry into the accuracy of such ▇▇▇▇, statement or
estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien
or title or claim thereof, provided, however, Lender shall use reasonable
efforts to pay such real property taxes sufficiently early to obtain the benefit
of any available discounts of which it has knowledge. If the amount of the Tax
and Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Tax and Insurance
Escrow Fund. The Tax and Insurance Escrow Fund shall be held by Lender in an
interest-bearing account and shall at Lender's option be held in Eligible
Account at an Eligible Institution. Any interest earned on said account shall
accrue in said account for the benefit of Borrower, but shall remain in and
constitute part of the Tax and Insurance Escrow Fund, and shall be disbursed in
accordance with the terms hereof. Any amount remaining in the Tax and Insurance
Escrow Fund after the Debt has been paid in full shall be returned to Borrower.
In allocating such excess, Lender may deal with the Person shown on the records
of Lender to be the owner of the Property. If at any time Lender reasonably
determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes or Insurance Premiums by the dates set forth above,
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to delinquency of the
Taxes or Insurance Premiums.
Notwithstanding anything to the contrary hereinbefore contained, in the
event that Borrower provides (1) evidence satisfactory to Lender that the
Property is insured in accordance with SECTION 6.1 of this Agreement, (2)
evidence satisfactory to Lender that the Taxes for the Property have been paid
in accordance with the requirements set forth in this Agreement and (3) so long
as no Event of Default exists, Lender will waive the requirement set forth
herein for Borrower to make deposits into the Tax and Insurance Escrow Fund for
the payment of Insurance Premiums and for payment of such Taxes, provided,
however, Lender expressly reserves the right to require Borrower to make
deposits to the Tax and Insurance Escrow Fund for the payment of Insurance
Premiums if at any time the Property is not insured in accordance with SECTION
6.1 of this Agreement, Taxes are not paid in accordance with the requirements of
this Agreement or an Event of Default exists.
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Section 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
7.3.1 REPLACEMENT RESERVE FUND. Borrower shall pay to Lender on the
Closing Date and on each Payment Date one twelfth of the amount (the
"REPLACEMENT RESERVE MONTHLY DEPOSIT") reasonably estimated by Lender in its
sole discretion to be due for replacements and repairs required to be made to
the Property during the calendar year (collectively, the "REPLACEMENTS"), which
Replacement Reserve Monthly Deposit shall be in an amount equal to no less than
$0.15 per year per square foot of gross leasable area. Amounts so deposited
shall hereinafter be referred to as Borrower's "REPLACEMENT RESERVE FUND" and
the account in which such amounts are held shall hereinafter be referred to as
Borrower's "REPLACEMENT RESERVE ACCOUNT". Lender may reassess its estimate of
the amount necessary for the Replacement Reserve Fund from time to time, and may
increase the monthly amounts required to be deposited into the Replacement
Reserve Fund upon thirty (30) days notice to Borrower if Lender determines in
its reasonable discretion that an increase is necessary to maintain the proper
maintenance and operation of the Property. Any amount held in the Replacement
Reserve Account and allocated for the Property shall be retained by Lender in an
interest bearing account, or, at the option of Lender, in an Eligible Account at
an Eligible Institution; PROVIDED, HOWEVER, that, any interest earned on said
account shall accrue in said account for the benefit of Borrower, but shall
remain in and constitute part of the Replacement Reserve Fund, and shall be
disbursed in accordance with the terms hereof.
Notwithstanding anything to the contrary in this Section 7.3, Borrower
shall not be required to make Replacement Reserve Monthly Deposits, provided
that: (i) no Event of Default shall have occurred; and (ii) Borrower makes all
necessary Replacements and otherwise maintains the Property to Lender's
satisfaction. Upon notice from Lender following: (a) an Event of Default; or (b)
the failure of Borrower to make necessary Replacements or otherwise maintain the
Property to Lender's satisfaction, Borrower shall begin to deposit the
Replacement Reserve Monthly Deposit into the Replacement Reserve Fund beginning
on the Payment Date (as defined herein) immediately following the date of such
notice.
7.3.2 DISBURSEMENTS FROM REPLACEMENT RESERVE ACCOUNT. (a) Lender
shall make disbursements from the Replacement Reserve Account to pay Borrower
only for the costs of the Replacements. Lender shall not be obligated to make
disbursements from the Replacement Reserve Account to reimburse Borrower for the
costs of routine maintenance to the Property or for costs which are to be
reimbursed from the Required Repair Fund (if any).
(b) Lender shall, upon written request from Borrower and
satisfaction of the requirements set forth in this Section 7.3.2, disburse to
Borrower amounts from the Replacement Reserve Account necessary to pay for the
actual approved costs of Replacements or to reimburse Borrower therefor, upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to Section 7.3.2(f)) as determined by Lender. In no
event shall Lender be obligated to disburse funds from the Replacement Reserve
Account if a Default or an Event of Default exists.
(c) Each request for disbursement from the Replacement Reserve
Account shall be in a form specified or approved by Lender and shall specify (i)
the specific Replacements for which the disbursement is requested, (ii) the
quantity and price of each item
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purchased, if the Replacement includes the purchase or replacement of specific
items, (iii) the price of all materials, (grouped by type or category) used in
any Replacement other than the purchase or replacement of specific items, and
(iv) the cost of all contracted labor or other services applicable to each
Replacement for which such request for disbursement is made. With each request
Borrower shall certify that all Replacements have been made in accordance with
all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the Property to which the Replacements are being provided and,
unless Lender has agreed to issue joint checks as described below, each request
shall include evidence of payment of all such amounts. Each request for
disbursement shall include copies of invoices for all items or materials
purchased and all contracted labor or services provided. Except as provided in
Section 7.3.2(e), each request for disbursement from the Replacement Reserve
Account shall be made only after completion of the Replacement for which
disbursement is requested. Borrower shall provide Lender evidence of completion
satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to which a disbursement is requested prior to
submitting such request for disbursement from the Replacement Reserve Account
or, at the request of Borrower, Lender will issue joint checks, payable to
Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case
of payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal
to or greater than $100,000 for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the requirements
of applicable law and shall cover all work performed and materials supplied
(including equipment and fixtures) for the Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request).
(e) If (i) the cost of a Replacement exceeds $100,000, (ii) the
contractor performing such Replacement requires periodic payments pursuant to
terms of a written contract, and (iii) Lender has approved in writing in advance
such periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are on site
at the Property and are properly secured or have been installed in the Property,
(C) all other conditions in this Agreement for disbursement have been satisfied,
(D) funds remaining in the Replacement Reserve Account are, in Lender's
judgment, sufficient to complete such Replacement and other Replacements when
required, and (E) if required by Lender, each contractor or subcontractor
receiving payments under such contract shall provide a waiver of lien with
respect to amounts which have been paid to that contractor or subcontractor.
(f) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection
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with the final disbursement) the total cost of all Replacements in any request
shall not be less than $5,000.00,
7.3.3 PERFORMANCE OF REPLACEMENTS.
(a) Borrower shall make Replacements when required in order to
keep the Property in condition and repair consistent with other first class,
full service retail properties in the same market segment in the metropolitan
area in which the Property is located, and to keep the Property or any portion
thereof from deteriorating. Borrower shall complete all Replacements in a good
and workmanlike manner as soon as practicable following the commencement of
making each such Replacement.
(b) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials under contracts for an
amount in excess of $100,000 in connection with the Replacements performed by
Borrower. Upon Lender's request, Borrower shall assign any contract or
subcontract to Lender.
(c) In the event Lender determines in its reasonable discretion
that any Replacement is not being performed in a workmanlike or timely manner or
that any Replacement has not been completed in a workmanlike or timely manner,
and such failure continues to exist for more than thirty (30) days after notice
from Lender to Borrower, Lender shall have the option to withhold disbursement
for such unsatisfactory Replacement and to proceed under existing contracts or
to contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, without providing any prior notice to Borrower and to exercise
any and all other remedies available to Lender upon an Event of Default
hereunder.
(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto the Property and perform any and all work and labor
necessary to complete or make the Replacements and/or employ watchmen to protect
the Property from damage, subject to the rights of Tenants. All sums so expended
by Lender, to the extent not from the Replacement Reserve Fund, shall be deemed
to have been advanced under the Loan to Borrower and secured by the Mortgage.
For this purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Replacements in the name of Borrower. Such power of attorney shall be deemed to
be a power coupled with an interest and cannot be revoked but shall only be
effective following an Event of Default. Borrower empowers said attorney-in-fact
as follows: (i) to use any funds in the Replacement Reserve Account for the
purpose of making or completing the Replacements; (ii) to make such additions,
changes and corrections to the Replacements as shall be necessary or desirable
to complete the Replacements; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv)
to pay, settle or compromise all existing bills and claims which are or may
become Liens against the Property, or as may be necessary or desirable for the
completion of the Replacements, or for clearance of title; (v) to execute all
applications and certificates in the name of Borrower which may be required by
any of the contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with the Property or the
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rehabilitation and repair of the Property; and (vii) to do any and every act
which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender
responsible for making or completing the Replacements; (ii) require Lender to
expend funds in addition to the Replacement Reserve Fund to make or complete any
Replacement; (iii) obligate Lender to proceed with the Replacements; or (iv)
obligate Lender to demand from Borrower additional sums to make or complete any
Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this Section 7.3.3
to enter onto the Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any Replacements made pursuant to this Section 7.3.3. Borrower
shall cause all contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other persons described above in connection
with inspections described in this Section 7.3.3(f) or the completion of
Replacements pursuant to this Section 7.3.3.
(g) Lender may require an inspection of the Property at Borrower's
expense prior to making a monthly disbursement in excess of $10,000 from the
Replacement Reserve Account in order to verify completion of the Replacements
for which reimbursement is sought. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by
Lender and/or may require a copy of a certificate of completion by an
independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve Account. Borrower shall
pay the expense of the inspection as required hereunder, whether such inspection
is conducted by Lender or by an independent qualified professional.
(h) The Replacements and all materials, equipment, fixtures, or
any other item comprising a part of any Replacement shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other liens (except for those Liens existing on the date of
this Agreement which have been approved in writing by Lender).
(i) Before each disbursement from the Replacement Reserve Account,
Lender may require Borrower to provide Lender with a search of title to the
Property effective to the date of the disbursement, which search shows that no
mechanic's or materialmen's liens or other liens of any nature have been placed
against the Property since the date of recordation of the Mortgage and that
title to the Property is free and clear of all Liens (other than the lien of the
Mortgage and any other Liens previously approved in writing by Lender, if any).
(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
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(k) In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen's compensation
insurance, builder's risk, and public liability insurance and other insurance to
the extent required under applicable law in connection with a particular
Replacement. All such policies shall be in form and amount reasonably
satisfactory to Lender. All such policies which can be endorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so
endorsed. Certified copies of such policies shall be delivered to Lender.
7.3.4 FAILURE TO MAKE REPLACEMENTS. (a) It shall be an Event of
Default under this Agreement if Borrower fails to comply with any provision of
this Section 7.3 and such failure is not cured within thirty (30) days after
notice from Lender; PROVIDED, HOWEVER, if such failure is not capable of being
cured within said thirty (30) day period, then provided that Borrower commences
action to complete such cure and thereafter diligently proceeds to complete such
cure, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower, in the exercise of due diligence, to cure
such failure, but such additional period of time shall not exceed sixty (60)
days. Upon the occurrence of such an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose, including but
not limited to completion of the Replacements as provided in Section 7.3.3, or
for any other repair or replacement to the Property or toward payment of the
Debt in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply the Replacement Reserve Funds
shall be in addition to all other rights and remedies provided to Lender under
this Agreement and the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all
or any portion of the Replacement Reserve Fund on account of an Event of Default
to payment of the Debt or in any specific order or priority.
7.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The insufficiency
of any balance in the Replacement Reserve Account shall not relieve Borrower
from its obligation to fulfill all preservation and maintenance covenants in the
Loan Documents.
7.3.6 INDEMNIFICATION. BORROWER SHALL INDEMNIFY LENDER AND HOLD
LENDER HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, SUITS, CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS AND COSTS AND EXPENSES (INCLUDING
LITIGATION COSTS AND REASONABLE ATTORNEYS FEES AND EXPENSES) ARISING FROM OR IN
ANY WAY CONNECTED WITH THE PERFORMANCE OF THE REPLACEMENTS UNLESS THE SAME ARE
SOLELY DUE TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER. BORROWER SHALL
ASSIGN TO LENDER ALL RIGHTS AND CLAIMS BORROWER MAY HAVE AGAINST ALL PERSONS OR
ENTITIES SUPPLYING LABOR OR MATERIALS IN CONNECTION WITH THE REPLACEMENTS;
PROVIDED, HOWEVER, THAT LENDER MAY NOT PURSUE ANY SUCH RIGHT OR CLAIM UNLESS AN
EVENT OF DEFAULT HAS OCCURRED AND REMAINS UNCURED.
Section 7.4 INTENTIONALLY OMITTED.
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Section 7.5 INTENTIONALLY OMITTED.
Section 7.6 INTENTIONALLY OMITTED.
Section 7.7 RESERVE FUNDS, GENERALLY.
7.7.1 Borrower grants to Lender a first-priority perfected security
interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the Debt.
Until expended or applied in accordance herewith, the Reserve Funds shall
constitute additional security for the Debt.
7.7.2 Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in any or all of the Reserve Funds to the payment of the Debt
in any order in its sole discretion.
7.7.3 The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
7.7.4 Intentionally omitted.
7.7.5 Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in any
Reserve Fund or the monies deposited therein or permit any lien or encumbrance
to attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.
7.7.6 Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds unless occasioned by the
gross negligence or willful misconduct of Lender.
7.7.7 Upon payment in full of the Debt and performance of all other
obligations under this Agreement and the other Loan Documents, Lender shall
disburse to Borrower all remaining Reserve Funds.
ARTICLE VIII
DEFAULTS
Section 8.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (an "EVENT OF DEFAULT"):
(i) if any portion of the Debt is not paid within five (5) days of
the applicable due date;
(ii) if any of the Taxes or Other Charges are not paid prior to the
date when the same become delinquent, except to the extent that Borrower is
contesting same in
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accordance with the terms of Section 5.1.2 hereof, or there are sufficient
funds in the Tax and Insurance Escrow Fund to pay such Taxes or Other
Charges and Lender fails to or refuses to release the same from the Tax and
Insurance Escrow Fund;
(iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender within ten
(10) days of request;
(iv) if Borrower transfers or encumbers any portion of the Property
without Lender's prior written consent (to extent such consent is required)
or otherwise violates the provisions of Section 5.2.13 of this Loan
Agreement;
(v) if any material representation or warranty made by Borrower
herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as of
the date the representation or warranty was made;
(vi) if Borrower or indemnitor or any guarantor under any guaranty
or indemnity issued in connection with the Loan shall make an assignment
for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower or any guarantor or indemnitor under any guarantee or indemnity
issued in connection with the Loan or if Borrower or such guarantor or
indemnitor shall be adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or such guarantor or
indemnitor, or if any proceeding for the dissolution or liquidation of
Borrower or such guarantor or indemnitor shall be instituted; PROVIDED,
HOWEVER, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower or such guarantor or
indemnitor, upon the same not being discharged, stayed or dismissed within
one hundred eighty (180) days;
(viii) if Borrower attempts to assign its rights under this Agreement
or any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative covenants
contained in Section 5.2 or any covenant contained in Section 4.1.30
hereof;
(x) with respect to any term, covenant or provision set forth
herein which specifically contains a notice requirement or grace period, if
Borrower shall be in default under such term, covenant or condition after
the giving of such notice or the expiration of such grace period;
(xi) if any of the assumptions contained in any Insolvency Opinion
or Additional Insolvency Opinion are or shall become untrue in any material
respect;
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(xii) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xi) above, for ten (10) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment
of a sum of money, or for thirty (30) days after notice from Lender in the
case of any other Default; PROVIDED, HOWEVER, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such
30-day period and provided further that Borrower shall have commenced to
cure such Default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be
extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not
to exceed one hundred eighty (180) days; or
(xiii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or the Property, or if any other such event shall
occur or condition shall exist, if the effect of such event or condition is
to accelerate the maturity of any portion of the Debt or to permit Lender
to accelerate the maturity of all or any portion of the Debt.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter 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, Lender may 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 clauses (vi), (vii) or
(viii) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
Section 8.2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to the Property. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
Without limiting the generality of the foregoing, Borrower agrees that if an
Event of Default is continuing (i) Lender is not subject to
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any "one action" or "election of remedies" law or rule, and (ii) all liens and
other rights, remedies or privileges provided to Lender shall remain in full
force and effect until Lender has exhausted all of its remedies against the
Property and the Mortgage has been foreclosed, sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in full.
(b) Lender shall have the right from time to time to partially
foreclose the Mortgage in any manner and for any amounts secured by the Mortgage
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose the Mortgage
to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose the Mortgage to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by the Mortgage as
Lender may elect. Notwithstanding one or more partial foreclosures, the Property
shall remain subject to the Mortgage to secure payment of sums secured by the
Mortgage and not previously recovered.
(c) Lender shall have the right from time to time to sever the
Note and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "SEVERED LOAN DOCUMENTS") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender following the occurrence of an Event of Default as
its true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect the aforesaid
severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; PROVIDED, HOWEVER, Lender shall not make or execute any such documents
under such power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. Borrower
shall not be obligated to pay any costs or expenses incurred in connection with
the preparation, execution, recording or filing of the Severed Loan Documents,
and the Severed Loan Documents shall not contain any representations, warranties
or covenants not contained in the Loan Documents and any such representations
and warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date.
(d) As used in this Section 8.2, a "foreclosure" shall include any
sale by power of sale.
Section 8.3 REMEDIES CUMULATIVE; WAIVERS. The rights, powers and remedies
of Lender under this Agreement shall be cumulative and not exclusive of any
other right, power or remedy which Lender may have against Borrower pursuant to
this Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall
69
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.
ARTICLE IX
SPECIAL PROVISIONS
Section 9.1 SALE OF NOTES AND SECURITIZATION. 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 shall cooperate with Lender to allow Lender 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 the sale of the Note or participations therein or the first
successful securitization (such sale and/or securitization, the
"SECURITIZATION") of rated single or multi-class securities (the "SECURITIES")
secured by or evidencing ownership interests in the Note and the Mortgage. In
this regard Borrower shall:
(a) (i) provide such financial and other information with respect
to the Property, Borrower and the 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 verification 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) cause counsel to render opinions, which may be relied upon by
the holder of the Note, the Rating Agencies and their respective counsel, agents
and representatives, as to non-consolidation, fraudulent conveyance, and true
sale and/or lease or any other opinion customary in securitization transactions,
which counsel and opinions shall be reasonably satisfactory to the holder of the
Note and the Rating Agencies;
(c) make such representations and warranties as of the closing
date of the Securitization with respect to the Property, Borrower, and the Loan
Documents as are consistent with the representations and warranties made in the
Loan Documents; and
(d) execute such amendments to the Loan Documents and
organizational documents as may be reasonably 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 (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.
All material out-of-pocket third party costs and expenses incurred by
Borrower in connection with complying with requests made under this Section 9.1
shall be paid by Lender.
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Section 9.2 SECURITIZATION. Borrower understands that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.
Section 9.3 RATING SURVEILLANCE. Lender, at its option, may retain the
Rating Agencies to provide rating surveillance services on any certificates
issued in a Securitization. Such rating surveillance will be at the expense of
Lender (the "RATING SURVEILLANCE CHARGE").
Section 9.4 EXCULPATION. Subject to the qualifications below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
obligations contained in the Note, this Agreement, the Mortgage or the other
Loan Documents by any action or proceeding wherein a money judgment shall be
sought against Borrower, except that Lender or Trustee may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender or Trustee to enforce and realize upon its interest
under the Note, this Agreement, the Mortgage and the other Loan Documents, or in
the Property, the Rents following an Event of Default, or any other collateral
given to Lender or Trustee pursuant to the Loan Documents; provided, however,
that, except as specifically provided herein, any judgment in any such action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents following an Event of Default
and in any other collateral given to Lender or Trustee, and Lender or Trustee,
by accepting the Note, this Agreement, the Mortgage and the other Loan
Documents, agrees that it shall not ▇▇▇ for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding under or by reason of
or under or in connection with the Note, this Agreement, the Mortgage or the
other Loan Documents. The provisions of this section shall not, however, (a)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (b) impair the right of Lender or Trustee
to name Borrower as a party defendant in any action or suit for foreclosure and
sale under any of the Mortgage; (c) affect the validity or enforceability of or
any guaranty made in connection with the Loan or any of the rights and remedies
of Lender thereunder; (d) impair the right of Lender or Trustee to obtain the
appointment of a receiver; (e) impair the enforcement of any of the Assignment
of Leases following an Event of Default; (f) constitute a prohibition against
Lender or Trustee commencing any other appropriate action or proceeding in order
for Lender to exercise its remedies against the Property; or (g) constitute a
waiver of the right of Lender or Trustee to enforce the liability and obligation
of Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:
71
(i) fraud or intentional misrepresentation by Borrower or any
Indemnitor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) material physical waste of the Property;
(iv) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the Mortgage
concerning environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either document;
(v) the removal or disposal of any portion of the Property after
an Event of Default;
(vi) the misapplication or conversion by Borrower of (A) any
insurance proceeds paid by reason of any loss, damage or destruction to the
Property which are not applied by Borrower in accordance with this
Agreement, (B) any awards or other amounts received in connection with the
condemnation of all or a portion of the Property which are not applied by
Borrower in accordance with this Agreement, or (C) any Rents following an
Event of Default;
(vii) failure to pay charges for labor or materials or other charges
that can create liens on any portion of the Property; or
(viii) any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender
upon a foreclosure of the Property or action in lieu thereof, except to the
extent any such security deposits were applied in accordance with the terms
and conditions of any of the Leases prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in this Agreement, the Note,
the Indemnity Agreement or any of the Loan Documents, (A) the Debt shall be
fully recourse to the Borrower and (B) Lender shall not be deemed to have waived
any right which Lender may have under Section 506(a), 506(b), 1111(b) or any
other provisions of the U.S. Bankruptcy Code to file a claim for the full amount
of the Debt secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan
Documents in the event that (I) the first full monthly payment under the Note is
not paid within five (5) days of notice that such payment is late (provided,
however, that such five (5) day grace period relates only to the recourse
trigger described in this paragraph), or (II) Borrower fails to permit on-site
inspections of the Property subject to the rights of Tenants and any applicable
cure period set forth in the Loan Documents, to provide financial information as
required under the Loan Documents subject to any applicable cure period (except
for financial information required to be delivered by a tenant pursuant to the
applicable Lease that has not been delivered to Borrower, provided Borrower has
requested such financial information from such tenant), or to comply with
Section 4.1.30 hereof, or (III) Borrower fails to obtain Lender's prior written
consent (to the extent such consent is required) to any subordinate financing or
other voluntary
72
lien encumbering the Property, or (IV) Borrower fails to obtain Lender's prior
written consent to any assignment, transfer or conveyance of the Property, or
any portion thereof, or any interest therein as required by this Agreement, so
long as any of the events described in clauses (I), (II), (III) or (IV) of this
paragraph continue to exist. Notwithstanding the provision set forth in clause
(III) of this paragraph, a voluntary lien OTHER THAN a lien securing an
extension of credit filed against the Property shall not constitute a recourse
trigger for purposes of this paragraph provided such lien (A) is fully bonded to
the satisfaction of Lender and discharged of record within ninety (90) days of
filing, or (B) within such ninety (90) day period, Lender receives affirmative
title insurance from the title insurance company insuring the lien of the
Mortgage that such lien is subject and subordinate to the lien of the Mortgage
and no enforcement action is commenced by the applicable lien holder.
Section 9.5 TERMINATION OF MANAGER. If (a) the amounts evidenced by the
Note have been accelerated pursuant to Section 8.1(b) hereof, (b) the Manager
shall become insolvent, (c) the Manager is in default under the terms of the
Management Agreement beyond any applicable grace or cure period, or (d) Manager
is not managing the Property in accordance with the management practices of
nationally recognized management companies managing similar properties in
locations comparable to those of the Property, then, in the case of (a), (b),
(c) or (d), Borrower shall, at the request of Lender, terminate the Management
Agreement and replace the Manager with a manager reasonably approved by Lender
on terms and conditions reasonably satisfactory to Lender, it being understood
and agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates. In addition and without limiting the rights of
Lender hereunder or under any of the other Loan Documents, in the event that (i)
the Management Agreement is terminated, (ii) the Manager no longer manages the
Property, or (iii) a receiver, liquidator or trustee shall be appointed for
Manager or if Manager shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Manager, or if any proceeding for
the dissolution or liquidation of Manager shall be instituted, then Borrower (at
Borrower's sole cost and expense) shall immediately, in its name, establish new
deposit accounts separate from any other Person with a depository satisfactory
to Lender into which all Rents and other income from the Property shall be
deposited and shall grant Lender a first priority security interest in such
account pursuant to documentation satisfactory in form and substance to Lender.
Section 9.6 SERVICER. At the option of Lender, the Loan may be serviced by
a servicer/trustee (the "SERVICER") selected by Lender and Lender may delegate
all or any portion of its responsibilities under this Agreement and the other
Loan Documents to the Servicer pursuant to a servicing agreement (the "SERVICING
AGREEMENT") between Lender and Servicer. Lender shall be responsible for any
set-up fees or any other costs relating to or arising under the Servicing
Agreement.
Section 9.7 SPLITTING THE LOAN. At the election of Lender in its sole
discretion, the Loan or any individual Note making up the Loan shall be split
and severed into two or more loans which, at Lender's election, shall not be
cross-collateralized or cross-defaulted with each other. Borrower hereby agrees
to deliver to Lender to effectuate such severing of the Loan or any individual
Note, as the case may be, as reasonably requested by Lender, (a) additional
executed documents, or amendments and modifications to the applicable Loan
Documents, (b)
73
new opinions or updates to the opinions delivered to Lender in connection with
the closing of the Loan, (c) endorsements and/or updates to the title insurance
policies delivered to Lender in connection with the closing of the Loan, and (d)
any other certificates, instruments and documentation reasonably determined by
Lender as necessary or appropriate to such severance (the items described in
subsections (a) through (d) collectively hereinafter shall be referred to as
"SEVERING DOCUMENTATION"), which Severing Documentation shall be acceptable to
Lender in form and substance in its reasonable discretion. Lender hereby agrees
to be responsible for all reasonable third-party expenses incurred in connection
with the preparation and delivery of the Severing Documentation and the
effectuation of the uncrossing of the Loan from the additional Loans. Borrower
hereby acknowledges and agrees that upon such severing of the Loan, Lender may
effect, in its sole discretion, one or more Securitizations of which the severed
loans may be a part.
ARTICLE X
MISCELLANEOUS
Section 10.1 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
party. All covenants, promises and agreements in this Agreement, by or on behalf
of Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.
Section 10.2 LENDER'S DISCRETION. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 10.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ IN CONNECTION WITH ANY PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Section 10.4 MODIFICATION, WAIVER IN WRITING. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein,
74
no notice to, or demand on Borrower, shall entitle Borrower to any other or
future notice or demand in the same, similar or other circumstances.
Section 10.5 DELAY NOT A WAIVER. Neither any failure nor any delay on the
part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.
Section 10.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
If to Lender:
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Capital Markets
Inland-Lincoln Park
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Borrower:
Inland Western Dallas Lincoln Park Limited Partnership
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to:
Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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.
Section 10.7 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE 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. LENDER IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER AND LENDER. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY BORROWER AND BY LENDER, AND BORROWER ACKNOWLEDGES ON BEHALF OF ITSELF
AND ITS PARTNERS, MEMBERS, SHAREHOLDERS, AS THE CASE MAY BE, THAT NEITHER LENDER
NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT
TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY
MODIFY OR
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NULLIFY ITS EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND
LENDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE LOAN DOCUMENTS
AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THE LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH COUNSEL.
Section 10.8 HEADINGS. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
Section 10.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.10 PREFERENCES. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 10.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 10.12 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The
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parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 10.13 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to pay or, if Borrower fails to
pay, to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Property); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) except as otherwise provided in this Agreement, the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters reasonably requested by
Lender; (v) securing Borrower's compliance with any requests made pursuant to
the provisions of this Agreement; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Property, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Property 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.
(b) BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER FROM
AND AGAINST ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS
OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL FOR LENDER IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING COMMENCED OR THREATENED,
WHETHER OR NOT LENDER SHALL BE DESIGNATED A PARTY THERETO), THAT MAY BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST LENDER IN ANY MANNER RELATING TO OR ARISING
OUT OF (I) ANY
78
BREACH BY BORROWER OF ITS OBLIGATIONS UNDER, OR ANY MATERIAL MISREPRESENTATION
BY BORROWER CONTAINED IN, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR (II)
THE USE OR INTENDED USE OF THE PROCEEDS OF THE LOAN (COLLECTIVELY, THE
"INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, THAT BORROWER SHALL NOT HAVE ANY
OBLIGATION TO LENDER HEREUNDER TO THE EXTENT THAT SUCH INDEMNIFIED LIABILITIES
ARISE FROM THE GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCT OF
LENDER. TO THE EXTENT THAT THE UNDERTAKING TO INDEMNIFY, DEFEND AND HOLD
HARMLESS SET FORTH IN THE PRECEDING SENTENCE MAY BE UNENFORCEABLE BECAUSE IT
VIOLATES ANY LAW OR PUBLIC POLICY, BORROWER SHALL PAY THE MAXIMUM PORTION THAT
IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND
SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY LENDER.
Section 10.14 SCHEDULES INCORPORATED. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of Lender's
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.
Section 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
79
Section 10.17 PUBLICITY. All news releases, publicity or advertising by
Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, Bear ▇▇▇▇▇▇▇, or any of their Affiliates shall be subject
to the prior written approval of Lender. All news releases, publicity or
advertising by Lender through any media intended to reach the general public
which refers solely to the Borrower or to the Loan made by the Lender to the
Borrower shall be subject to the prior written approval of Borrower, provided
however, the foregoing shall not apply to Provided Information included in
disclosure documents in connection with a Securitization.
Section 10.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower's partners and
others with interests in Borrower, and of the Property, or to a sale in inverse
order of alienation in the event of foreclosure of the Mortgage or sale of the
Property by power of sale, and agrees not to assert any right under any laws
pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Property for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Property in
preference to every other claimant whatsoever.
Section 10.19 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
Section 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the event
of any conflict between the provisions of this Loan Agreement and any of the
other Loan Documents, the provisions of this Loan Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
Section 10.21 BROKERS AND FINANCIAL ADVISORS. BORROWER HEREBY REPRESENTS
THAT IT HAS DEALT WITH NO FINANCIAL ADVISORS, BROKERS, UNDERWRITERS, PLACEMENT
AGENTS, AGENTS OR FINDERS IN
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CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THAN
INLAND MORTGAGE CORP. BORROWER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD
LENDER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, COSTS AND
EXPENSES OF ANY KIND (INCLUDING LENDER'S REASONABLE ATTORNEYS' FEES AND
EXPENSES) IN ANY WAY RELATING TO OR ARISING FROM A CLAIM BY ANY PERSON THAT SUCH
PERSON ACTED ON BEHALF OF BORROWER OR LENDER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREIN. THE PROVISIONS OF THIS SECTION 10.21 SHALL SURVIVE THE
EXPIRATION AND TERMINATION OF THIS AGREEMENT AND THE PAYMENT OF THE DEBT.
Section 10.22 PRIOR AGREEMENTS. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements or
understandings among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents and
unless specifically set forth in a writing contemporaneous herewith the terms,
conditions and provisions of such prior agreement do not survive execution of
this Agreement.
Section 10.23 SALE OF LOAN. Lender, at any time and without the consent of
Borrower or Indemnitor, may grant participation in or sell, transfer, assign and
convey all or any portion of its right, title and interest in and to the Loan,
the servicing of the Loan, this Mortgage and the other Loan Documents, any
guaranties given in connection with the Loan and any collateral given to secure
the Loan. Borrower covenants to cooperate with Lender's efforts in the
securitization of the Loan; such cooperation includes Borrower's obligation to
(a) make non-material modifications of the Loan Documents (such modifications
shall not (i) increase the amount of the Indebtedness, (ii) change the schedule
and/or the amount of the monthly payment and (iii) change the Interest Rate),
(b) provide additional information regarding Borrower's financial statements,
(c) deliver updated information regarding Borrower and the Property, (d)
cooperate with any third parties, including, but not limited to, rating agencies
and potential investors to facilitate the rating and securitization of the
Loan, (e) review Lender's securitization offering materials to the extent such
materials relate to Borrower, the Property or the Loan and (f) respond to any
inquiries of Lender or other party relating thereto. Borrower agrees to
represent and warrant the absence of misstatements and/or omissions in the
information relating to Borrower, the Property and the Loan that is contained in
the offering materials and which has been furnished to or approved by Borrower.
Borrower shall not be liable for Lender's post-closing costs incurred pursuant
to any securitization of the Loan by Lender.
Section 10.24 JOINT AND SEVERAL LIABILITY. If Borrower consists of more
than one person or party, the obligations and liabilities of each person or
party shall be joint and several.
(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
WITNESS: INLAND WESTERN DALLAS LINCOLN
PARK LIMITED PARTNERSHIP,
an
Illinois limited partnership
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: Inland Western Dallas Lincoln Park GP, L.L.C.,
--------------------- a Delaware limited liability company,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ its sole general partner
By: Inland Western Retail Real Estate Trust, Inc.,
a Maryland corporation,
its sole member
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
---------------------
Title: Asst Secretary
--------------------
LENDER:
WITNESS: LASALLE BANK NATIONAL ASSOCIATION,
a national banking association
By:
------------------ ---------------------------------
Name:
-------------------------------
Title:
------------------------------
SCHEDULE I
Intentionally Omitted
SCH. X-l
SCHEDULE II
Intentionally Omitted
SCH. X-l
SCHEDULE III
REQUIRED REPAIRS
SCH. X-2
SCHEDULE IV
RENT ROLL
[To Be Attached]
SCH. X-3
SCHEDULE V
Intentionally Omitted
SCH. X-4
SCHEDULE VI
Intentionally Omitted.
SCH. X-5
SCHEDULE VII
PROPERTY AFFECTED BY SECTION 4.1.22
SCH. X-6
SCHEDULE VIII
Intentionally Omitted.
SCH. X-7
SCHEDULE IX
Intentionally Omitted,
SCH. X-8
SCHEDULE X
OTHER CONTRACT FUNDS AGREEMENTS
9