Exhibit 10.1
LOAN AGREEMENT
Dated as of July 19, 2005
Between
YSI VI LLC,
as Borrower
and
▇▇▇▇▇▇ BROTHERS BANK, FSB,
as Lender
TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................ 1
Section 1.1 Definitions....................................... 1
Section 1.2 Principles of Construction........................ 19
II. GENERAL TERMS...................................................... 19
Section 2.1 Loan Commitment; Disbursement to Borrower......... 19
2.1.1 The Loan.......................................... 19
2.1.2 Disbursement to Borrower.......................... 19
2.1.3 The Note, Security Instruments and Loan
Documents......................................... 19
2.1.4 Use of Proceeds................................... 19
Section 2.2 Interest; Loan Payments; Late Payment Charge...... 20
2.2.1 Interest Generally................................ 20
2.2.2 Interest Calculation.............................. 20
2.2.3 Payments.......................................... 20
2.2.4 Intentionally Deleted............................. 20
2.2.5 Payment on Maturity Date.......................... 20
2.2.6 Payments after Default............................ 20
2.2.7 Late Payment Charge............................... 21
2.2.8 Usury Savings..................................... 21
2.2.9 Making of Payments................................ 21
2.2.10 Indemnified Taxes................................. 21
Section 2.3 Prepayments....................................... 22
2.3.1 Voluntary Prepayments............................. 22
2.3.2 Mandatory Prepayments............................. 23
2.3.3 Prepayments After Default......................... 23
Section 2.4 Defeasance........................................ 23
2.4.1 Voluntary Defeasance.............................. 23
2.4.2 Successor Borrower................................ 25
Section 2.5 Release of Property............................... 26
2.5.1 Release of all Properties......................... 26
2.5.2 Release of Individual Property.................... 26
2.5.3 Release on Payment in Full........................ 27
Section 2.6 Manner of Making Payments; Cash Management........ 27
2.6.1 Deposits into Lockbox Account..................... 27
2.6.2 Payments Received in the Lockbox Account.......... 28
2.6.3 No Deductions, etc................................ 28
Section 2.7 Substitute Property............................... 28
III. CONDITIONS PRECEDENT............................................... 35
Section 3.1 Conditions Precedent to Closing................... 35
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3.1.1 Representations and Warranties; Compliance with
Conditions........................................ 35
3.1.2 Loan Agreement and Note........................... 35
3.1.3 Delivery of Loan Documents; Title Insurance;
Reports; Leases................................... 35
3.1.4 Related Documents................................. 37
3.1.5 Delivery of Organizational Documents.............. 37
3.1.6 Opinions of Borrower's Counsel.................... 37
3.1.7 Budgets........................................... 37
3.1.8 Basic Carrying Costs.............................. 37
3.1.9 Completion of Proceedings......................... 37
3.1.10 Payments.......................................... 37
3.1.11 Tenant Estoppels.................................. 37
3.1.12 Transaction Costs................................. 38
3.1.13 Material Adverse Effect........................... 38
3.1.14 Leases and Rent Roll.............................. 38
3.1.15 Tax Lot........................................... 38
3.1.16 Physical Conditions Reports....................... 38
3.1.17 Management Agreement.............................. 38
3.1.18 Appraisal......................................... 38
3.1.19 Financial Statements.............................. 38
3.1.20 Further Documents................................. 38
IV. REPRESENTATIONS AND WARRANTIES..................................... 38
Section 4.1 Borrower Representations.......................... 38
4.1.1 Organization...................................... 39
4.1.2 Proceedings....................................... 39
4.1.3 No Conflicts...................................... 39
4.1.4 Litigation........................................ 39
4.1.5 Agreements........................................ 39
4.1.6 Title............................................. 40
4.1.7 Solvency / No Bankruptcy Filing................... 40
4.1.8 Full and Accurate Disclosure...................... 41
4.1.9 No Plan Assets.................................... 41
4.1.10 Compliance........................................ 41
4.1.11 Financial Information............................. 41
4.1.12 Condemnation...................................... 41
4.1.13 Federal Reserve Regulations....................... 42
4.1.14 Utilities and Public Access....................... 42
4.1.15 Not a Foreign Person.............................. 42
4.1.16 Separate Lots..................................... 42
4.1.17 Assessments....................................... 42
4.1.18 Enforceability.................................... 42
4.1.19 No Prior Assignment............................... 42
4.1.20 Insurance......................................... 42
4.1.21 Use of Property................................... 43
4.1.22 Certificate of Occupancy; Licenses................ 43
4.1.23 Flood Zone........................................ 43
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4.1.24 Physical Condition................................ 43
4.1.25 Boundaries........................................ 43
4.1.26 Leases............................................ 43
4.1.27 Survey............................................ 44
4.1.28 Loan to Value..................................... 44
4.1.29 Filing and Recording Taxes........................ 44
4.1.30 Single Purpose Entity/Separateness................ 45
4.1.31 Management Agreement.............................. 48
4.1.32 Illegal Activity.................................. 48
4.1.33 No Change in Facts or Circumstances; Disclosure... 48
4.1.34 Intellectual Property............................. 48
4.1.35 Investment Company Act............................ 49
4.1.36 Principal Place of Business; State of
Organization...................................... 49
4.1.37 Business Purposes................................. 49
4.1.38 Taxes............................................. 49
4.1.39 Forfeiture........................................ 49
4.1.40 Environmental Representations and Warranties...... 49
4.1.41 Taxpayer Identification Number.................... 50
4.1.42 OFAC.............................................. 50
4.1.43 Intentionally Deleted............................. 50
4.1.44 Embargoed Person.................................. 50
Section 4.2 Survival of Representations....................... 51
V. BORROWER COVENANTS................................................. 51
Section 5.1 Affirmative Covenants............................. 51
5.1.1 Existence; Compliance with Legal Requirements;
Insurance......................................... 51
5.1.2 Taxes and Other Charges........................... 52
5.1.3 Litigation........................................ 53
5.1.4 Access to Properties.............................. 53
5.1.5 Notice of Default................................. 53
5.1.6 Cooperate in Legal Proceedings.................... 53
5.1.7 Perform Loan Documents............................ 53
5.1.8 Awards or Insurance Benefits...................... 53
5.1.9 Further Assurances................................ 53
5.1.10 Supplemental Security Instrument Affidavits....... 54
5.1.11 Financial Reporting............................... 54
5.1.12 Business and Operations........................... 56
5.1.13 Title to the Properties........................... 56
5.1.14 Costs of Enforcement.............................. 56
5.1.15 Estoppel Statement................................ 56
5.1.16 Loan Proceeds..................................... 57
5.1.17 Performance by Borrower........................... 57
5.1.18 Confirmation of Representations................... 57
5.1.19 No Joint Assessment............................... 57
5.1.20 Leasing Matters................................... 57
5.1.21 Alterations....................................... 58
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5.1.22 Environmental Covenants........................... 59
5.1.23 OFAC.............................................. 60
5.1.24 O&M Program....................................... 60
Section 5.2 Negative Covenants................................ 60
5.2.1 Operation of Property............................. 61
5.2.2 Liens............................................. 61
5.2.3 Dissolution....................................... 61
5.2.4 Change In Business................................ 61
5.2.5 Debt Cancellation................................. 61
5.2.6 Affiliate Transactions............................ 61
5.2.7 Zoning............................................ 61
5.2.8 Assets............................................ 62
5.2.9 Debt.............................................. 62
5.2.10 No Joint Assessment............................... 62
5.2.11 Principal Place of Business....................... 62
5.2.12 ERISA............................................. 62
5.2.13 Transfers......................................... 62
Section 5.3 Traded Shares..................................... 66
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS................ 66
Section 6.1 Insurance......................................... 66
Section 6.2 Casualty.......................................... 70
Section 6.3 Condemnation...................................... 70
Section 6.4 Restoration....................................... 70
VII. RESERVE FUNDS...................................................... 75
Section 7.1 Required Repair Funds............................. 75
7.1.1 Deposits.......................................... 75
7.1.2 Release of Required Repair Funds.................. 75
Section 7.2 Tax and Insurance Escrow Fund..................... 76
Section 7.3 Replacements and Replacement Reserve.............. 77
7.3.1 Replacement Reserve Fund.......................... 77
7.3.2 Disbursements from Replacement Reserve Account.... 77
7.3.3 Performance of Replacements....................... 79
7.3.4 Failure to Make Replacements...................... 81
7.3.5 Balance in the Replacement Reserve Account........ 81
Section 7.4 Intentionally Deleted............................. 81
Section 7.5 Leasing Reserve Fund.............................. 81
7.5.1 Deposits to Leasing Reserve Fund.................. 81
7.5.2 Withdrawals of Leasing Reserve Funds.............. 82
Section 7.6 Reserve Funds, Generally.......................... 82
VIII. DEFAULTS........................................................... 83
Section 8.1 Event of Default.................................. 83
Section 8.2 Remedies.......................................... 86
Section 8.3 Remedies Cumulative; Waivers...................... 87
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IX. SPECIAL PROVISIONS................................................. 87
Section 9.1 Sale of Notes and Securitization.................. 87
Section 9.2 Securitization Indemnification.................... 89
Section 9.3 Intentionally Deleted............................. 91
Section 9.4 Exculpation....................................... 91
Section 9.5 Management Agreement.............................. 93
Section 9.6 Servicer.......................................... 95
Section 9.7 Restructuring of Mortgage and/or Mezzanine Loan... 95
X. MISCELLANEOUS...................................................... 97
Section 10.1 Survival.......................................... 97
Section 10.2 Lender's Discretion............................... 97
Section 10.3 Governing Law..................................... 97
Section 10.4 Modification, Waiver in Writing................... 99
Section 10.5 Delay Not a Waiver................................ 99
Section 10.6 Notices........................................... 99
Section 10.7 Trial by Jury..................................... 100
Section 10.8 Headings.......................................... 100
Section 10.9 Severability...................................... 101
Section 10.10 Preferences....................................... 101
Section 10.11 Waiver of Notice.................................. 101
Section 10.12 Remedies of Borrower.............................. 101
Section 10.13 Expenses; Indemnity............................... 101
Section 10.14 Schedules Incorporated............................ 103
Section 10.15 Offsets, Counterclaims and Defenses............... 103
Section 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.................................. 103
Section 10.17 Publicity......................................... 104
Section 10.18 Cross-Default; Cross-Collateralization; Waiver
of Marshalling of Assets....................... 104
Section 10.19 Waiver of Counterclaim............................ 105
Section 10.20 Conflict; Construction of Documents; Reliance..... 105
Section 10.21 Brokers and Financial Advisors.................... 105
Section 10.22 Prior Agreements.................................. 105
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SCHEDULES
Schedule I - Properties - Allocated Loan Amounts
Schedule II - O&M Program Properties
Schedule 4.1.1 - Organizational Chart
Schedule 4.1.4 - Litigation
Schedule 4.1.5 - Material Agreements
Schedule 4.1.26 - Major Leases
Schedule 4.1.30 - Non-Consolidation Opinion
Schedule 4.1.31 - Properties Not Operated as a U-Store-It Facility
Schedule 7.1.1 - Required Repairs
Schedule 7.3.2 - Replacement Reserves
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 19, 2005 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between ▇▇▇▇▇▇ BROTHERS BANK, FSB, a federal stock savings bank,
having an address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("LENDER") and YSI VI LLC, a Delaware limited liability company, 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:
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION .1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean a "Big Four" accounting firm or
other independent certified public accountant acceptable to Lender.
"ACCOUNTS" shall have the meaning set forth in the Cash Management
Agreement.
"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.
"AGENT" shall have the meaning set forth in the Cash Management
Agreement.
"ALLOCATED LOAN AMOUNT" shall mean, for an Individual Property, the
amount set forth on Schedule I attached hereto.
"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 Properties prepared by Borrower for the applicable
Fiscal Year or other period.
"APPLICABLE INTEREST RATE" shall mean 5.13% per annum.
"APPROVED APPRAISAL" shall mean, with respect to an Individual
Property, an appraisal of such Individual Property (i) executed and delivered to
Lender by a qualified MAI appraiser having no direct or indirect interest in
such Individual Property or any loan secured in whole or in part thereby and
whose compensation is not affected by the approval or disapproval of such
appraisal by Lender; (ii) addressed to Lender and its successors and assigns;
(iii) satisfying the requirements of the Federal National Mortgage Association
or the Federal Home Loan Mortgage Corporation and Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date of such calculation, with
respect to such appraisal and the appraiser making such appraisal and (iv)
otherwise satisfactory to Lender in all respects in Lender's sole discretion.
"ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of Borrower's interest in and to the Leases and Rents of
such Individual 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 date hereof 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 any
Individual Property.
"BANKRUPTCY CODE" shall mean Title 11 U.S.C.Section 101 et seq., and
the regulations adopted and promulgated pursuant thereto (as the same may be
amended from time to time).
"BASIC CARRYING COSTS" shall mean, with respect to each Individual
Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums.
"BORROWER" shall mean YSI VI LLC, a Delaware limited liability
company, together with its successors and permitted assigns.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, New York are not open for
business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended
for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
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"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement by and among Borrower, Manager, Agent and Lender dated the date
hereof, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"CASUALTY" shall have the meaning specified in Section 6.2 hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in Section
6.4(b)(iii) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in Section
6.4(b)(iv) hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section
6.4(b).
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person, any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Yield Maintenance Premium) due
to Lender in respect of the Loan under the Note, this Agreement, the Security
Instruments or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, all principal and/or 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 Properties,
or (ii) amounts paid to the Reserve Funds, less (A) management
fees equal to the greater of (1) assumed
3
management fees of four percent (4%) of Gross Income from
Operations or (2) the actual management fees incurred, and (B)
actual Replacement Reserve Fund contributions equal to an annual
amount of $0.15 per square foot of gross leaseable area at the
Properties; and
(b) the denominator is the aggregate amount of principal and interest
due and payable on the Note or, in the event a Defeasance Event
has occurred, the Undefeased Note, for such 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 Legal Rate or (b) three percent (3%)
above the Applicable Interest Rate.
"DEFEASANCE DATE" shall have the meaning set forth in Section
2.4.1(a)(i) hereof.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the remaining
principal amount of the Note or the Defeased Note, as applicable, the Yield
Maintenance Premium, any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments
and any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Note or the Defeased Note, as
applicable, the creation of the Defeased Note and the Undefeased Note, if
applicable, or otherwise required to accomplish the agreements of Sections 2.3
and 2.4 hereof.
"DEFEASANCE EVENT" shall have the meaning set forth in Section
2.4.1(a) hereof.
"DEFEASED NOTE" shall have the meaning set forth in Section
2.4.1(a)(v) hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section
9.2(a) 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.
"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 S&P, P-1 by ▇▇▇▇▇'▇ and F-1+ by Fitch in the case of accounts in which funds
are held for 30 days or less (or, in the case of accounts in
4
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 "Aa2" by
▇▇▇▇▇'▇).
"EMBARGOED PERSON" shall have the meaning set forth in Section 4.1.44
hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental and
Hazardous Substance Indemnification 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 LAWS" shall have the meaning set forth in the
Environmental Indemnity.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section
5.1.22 hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section
4.1.40 hereof.
"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(a)
hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"FITCH" shall mean Fitch IBCA, Inc.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report
consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental unit (Federal, State, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean all income, computed in
accordance with GAAP, derived from the ownership and operation of the Properties
from whatever source, including, but not limited to, Rents, utility charges,
escalations, forfeited security deposits, interest on credit accounts, service
fees or charges, license fees, parking fees, rent concessions or credits, and
other required pass-throughs but excluding sales, use and occupancy or other
taxes on receipts required to be accounted for by Borrower to any Governmental
Authority, refunds and uncollectible accounts, sales of furniture, fixtures and
equipment, Insurance Proceeds (other than business interruption or other loss of
income insurance), Awards, unforfeited security deposits, utility and other
similar deposits and any disbursements to Borrower from the Reserve Funds, all
as approved by Lender. Gross income
5
shall not be diminished as a result of the Security Instrument or the creation
of any intervening estate or interest in the Properties or any part thereof.
"GUARANTOR" shall mean U-Store-It, L.P., a Delaware limited
partnership.
"GUARANTY" shall mean that certain Guaranty executed by Guarantor,
dated the date hereof, as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in the
Environmental Indemnity.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of the related Security Instrument with respect to each Individual 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.
"INDEMNIFIED PARTIES" shall mean Lender, any Person who is or will
have been involved in the origination of the Loan, any Person who is or will
have been involved with the servicing of the Loan, any Person in whose name the
encumbrance created by the Security Instrument is or will have been recorded,
Persons and entities who may hold or acquire or will have held a full or partial
interest in the Loan (including, but not limited to, Investors or prospective
Investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective directors, officers,
shareholders, partners, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including but not limited to any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan or the Properties, whether during the term
of the Loan or as a part of or following a foreclosure of the Loan and
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of Indemnitee's assets and
business).
"INDEMNIFIED TAXES" shall mean any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section
4.1.30(p) hereof.
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"INDIVIDUAL LTV RATIO" shall mean, with respect to an Individual
Property, the ratio of (a) the Allocated Loan Amount for such Individual
Property to (b) fair market value of such Individual Property set forth in an
Approved Appraisal.
"INDIVIDUAL PROPERTY" shall mean each parcel of real property, the
Improvements thereon and all personal property owned by Borrower and encumbered
by a Security Instrument, together with all rights pertaining to such property
and Improvements, as more particularly described in the granting clauses of each
Security Instrument and referred to therein as the "Property"; a list of all
Individual Properties on the date hereof appears on Schedule I attached hereto.
"INSOLVENCY OPINION" shall mean that certain opinion letter dated the
date hereof delivered by ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. in connection with the Loan.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section
6.1(b) hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section
6.4(b) hereof.
"INTELLECTUAL PROPERTY" shall mean patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights.
"INTEREST ONLY PAYMENT AMOUNT" shall have the meaning set forth in
Section 2.2.3 hereof.
"INTEREST PERIOD" shall mean, with respect to the application of the
Interest Only Payment Amount and the Monthly Debt Service Payment Amount paid by
Borrower on a Payment Date, the period commencing on the eleventh (11th) day of
the prior calendar month to and including the tenth (10th) day of the calendar
month in which such Payment Date occurs.
"INVESTOR" shall mean each purchaser, transferee, assignee, servicer,
participant or investor in such Securities or any credit rating agency rating
such Securities.
"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 any
Individual Property 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.
"LEASING RESERVE ACCOUNT" shall have the meaning set forth in the Cash
Management Agreement.
"LEASING RESERVE FUND" shall have the meaning set forth in Section
7.5.1 hereof.
"LEASE TERMINATION PAYMENTS" shall mean all payments made to Borrower
in connection with any termination, cancellation, surrender, sale or other
disposition of any Lease.
7
"LEGAL REQUIREMENTS" shall mean, with respect to each Individual
Property, all Federal, State, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting such Individual 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 such Individual
Property or any part thereof, including, without limitation, any which may (a)
require repairs, modifications or alterations in or to such Individual Property
or any part thereof, or (b) in any way limit the use and enjoyment thereof.
"▇▇▇▇▇▇" shall have the meaning set forth in Section 9.2(b) hereof.
"▇▇▇▇▇▇ GROUP" shall have the meaning set forth in Section 9.2(b)
hereof.
"LENDER" shall mean ▇▇▇▇▇▇ Brothers Bank, FSB, a federal stock savings
bank, together with its successors and assigns.
"LIABILITIES" shall have the meaning set forth in Section 9.2(b)
hereof.
"LICENSES" shall have the meaning set forth in Section 4.1.22 hereof.
"LIEN" shall mean, with respect to an Individual Property, any
mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance (but excluding any easements permitted by
Section 5.2.13 hereof), charge or transfer of, on or affecting Borrower, the
related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
the Security Instrument, the Assignment of Leases, the Environmental Indemnity,
the Assignment of Management Agreement, the Cash Management Agreement and all
other documents executed and/or delivered in connection with the Loan.
"LOAN TO VALUE RATIO" shall mean, as of the date of its calculation,
the ratio of (i) the sum of the outstanding principal amount of the Loan as of
the date of such calculation to (ii) the most recent appraised value of the
Properties (according to the most recent Approved Appraisal available to
Lender).
"LOCKBOX ACCOUNT" shall mean the account, if any, specified in the
Cash Management Agreement for deposit of Rents and other receipts from the
Properties.
8
"MAJOR LEASE" shall mean any Lease which together with all other
Leases to the same tenant and to all Affiliates of such tenant, (i) provides for
rental income representing ten percent (10%) or more of the total rental income
for the applicable Individual Property; or (ii) covers (A) ten percent (10%) or
more, or (B) 4,000 square feet or more, of the total leaseable area of the
related Individual Property.
"MANAGEMENT AGREEMENT" shall mean, with respect to any Individual
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 such Individual Property.
"MANAGER" shall mean YSI Management LLC, a Delaware limited liability
company, or, if the context requires, a Qualifying Manager who is managing the
Properties or any Individual Property in accordance with the terms and
provisions of this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean any condition which causes or
continues the occurrence of an Event of Default or has a material adverse effect
upon (i) the business, operations, properties, assets, prospects, corporate
structure or condition (financial or otherwise) of Borrower or any Guarantor,
individually or taken as a whole, (ii) the ability of Borrower or any Guarantor
to perform, or of Lender to enforce, any of their obligations under the Loan
Documents or (iii) the value of the Properties, individually or taken as a
whole.
"MATURITY DATE" shall mean August 11, 2012, or such other date on
which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such State or
States whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant monthly
payment of $435,836.00.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"NET CASH FLOW" for any period shall mean 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" for any period shall mean 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.
9
"NET OPERATING INCOME" shall mean the amount obtained by subtracting
Operating Expenses from Gross Income from Operations.
"NET PROCEEDS" shall have the meaning set forth in Section 6.4(b)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
"NONDISQUALIFICATION OPINION" shall mean an opinion of tax counsel,
which shall be independent outside counsel, to the effect that a contemplated
action would not materially adversely affect the Federal income tax status as a
REMIC, trust or other vehicle of any REMIC, trust or other vehicle in which the
Loan may be included at the time such opinion is required.
"NON-U.S. ENTITY" shall have the meaning set forth in Section
2.2.10(b) hereof.
"NOTE" shall mean that certain note of even date herewith in the
principal amount of EIGHTY MILLION AND 00/100 DOLLARS ($80,000,000.00), made by
Borrower in favor of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, including any Defeased
Note and Undefeased Note that may exist from time to time.
"O&M PROGRAM" shall mean, with respect to each Individual Property
listed on Schedule II attached hereto, the asbestos operations and maintenance
program developed by Borrower and approved by Lender, as the same may be
amended, replaced, supplemented or otherwise modified from time to time.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender
by Borrower which is signed by an authorized senior officer of the general
partner of the sole member Borrower.
"OPERATING EXPENSES" shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the operation,
maintenance and management of the Properties 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, all
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 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 any
Individual Property, now or hereafter levied or assessed or imposed against such
Individual Property or any part thereof.
"PAYMENT DATE" shall mean the eleventh (11th) 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.
10
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
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 Policies relating to such Individual 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 sole discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of such Individual 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 Monthly 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 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;
11
(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 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
12
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 or mutual 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 Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or mutual
funds; and
(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 OWNER" shall mean a Person who satisfies (i), (ii) or (iii)
below:
(i) a Qualified Transferee;
(ii) a Sponsor; or
(iii) any Person, prior to a Securitization, approved by Lender (such
approval not to be unreasonably withheld) or, regarding which, after a
Securitization, Lender has received confirmation from the Rating Agencies that
such transfer shall not result in a downgrade, qualification or withdrawal of
the then-current ratings assigned to the Securities.
"PERMITTED PREPAYMENT DATE" shall have the meaning set forth in
Section 2.3.1 hereof.
"PERMITTED RELEASE DATE" shall mean the date that is the earlier of
(a) three (3) years from the Closing Date or (b) two (2) years from the "startup
day" within the meaning of Section 860G(a)(9) of the Code of the REMIC Trust.
13
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any Federal, State, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Security Instrument with respect to each Individual Property.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each
Individual Property, a report prepared by a company satisfactory to Lender
regarding the physical condition of such Individual Property, satisfactory in
form and substance to Lender in its sole discretion, which report shall, among
other things, (a) confirm that such Individual Property and its use complies, in
all material respects, with all applicable Legal Requirements (including,
without limitation, zoning, subdivision and building laws) and (b) to the extent
available, include a copy of a final certificate of occupancy with respect to
all Improvements on such Individual Property.
"PLAN" shall mean an employee benefit plan (as defined in section 3(3)
of ERISA) whether or not subject to ERISA or a plan or other arrangement within
the meaning of Section 4975 of the Code.
"PLAN ASSETS" shall mean assets of a Plan within the meaning of
section 29 C.F.R. Section 2510.3-101 or similar law.
"POLICIES" shall have the meaning specified in Section 6.1(b) hereof.
"PROHIBITED PERSON" shall mean any Person:
(a) listed in the Annex to, or otherwise subject to the provisions of,
the Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001, and relating to Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (the "EXECUTIVE
Order");
(b) that is owned or controlled by, or acting for or on behalf of, any
person or entity that is listed to the Annex to, or is otherwise subject to the
provisions of, the Executive Order;
(c) with whom Lender is prohibited from dealing or otherwise engaging
in any transaction by any terrorism or money laundering law, including the
Executive Order;
(d) who commits, threatens or conspires to commit or supports
"terrorism" as defined in the Executive Order;
(e) that is named as a "specially designated national and blocked
person" on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website,
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇.▇▇▇▇/▇▇▇▇▇▇.▇▇▇ or at any replacement website or other
replacement official publication of such list; or
(f) who is an Affiliate of or affiliated with a Person listed above.
14
"PROPERTIES" shall mean, collectively, each and every Individual
Property which is subject to the terms of this Agreement.
"PROVIDED INFORMATION" shall have the meaning set forth in Section
9.1(a) hereof.
"QUALIFIED TRANSFEREE" shall mean any one of the following Persons:
(i) a pension fund, pension trust or pension account that (a) has
total real estate assets of at least $1 Billion and (b) is
managed by a Person who controls at least $1 Billion of real
estate equity assets; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $1 Billion of real estate equity
assets and (b) is acting on behalf of one or more pension funds
that, in the aggregate, satisfy the requirements of clause (i) of
this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a
State or territory of the United States (including the District
of Columbia) (a) with a net worth, as of a date no more than six
(6) months prior to the date of the transfer of at least $500
Million and (b) who, immediately prior to such transfer, controls
real estate equity assets of at least $1 Billion; or
(iv) a corporation organized under the banking laws of the United
States or any State or territory of the United States (including
the District of Columbia) (a) with a combined capital and surplus
of at least $500 Million and (b) who, immediately prior to such
transfer, controls real estate equity assets of at least $1
Billion; or
(v) any Person (a) with a long-term unsecured debt rating from each
of the Rating Agencies of at least investment grade or (b) who
(i) owns or operates at least one hundred (100) self-service
storage facilities totaling at least ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, (▇▇) has a net worth, as of a date no more
than six (6) months prior to the date of such transfer, of at
least $500 Million and (iii) immediately prior to such transfer,
controls real estate equity assets of at least $1 Billion.
"QUALIFYING MANAGER" shall mean (i) YSI Management LLC, a Delaware
limited liability company or (ii) a reputable and experienced management
organization possessing experience in managing properties similar in size, scope
and value to the Property, provided that (a) prior to a Securitization, Borrower
shall have obtained the prior written consent of Lender for such entity which
consent shall not be unreasonably withheld and (b) after a Securitization,
Borrower shall have obtained prior written confirmation from the Rating Agencies
that management of the Property by such entity will not, in and of itself, cause
a downgrade, withdrawal or qualification of the then current ratings of the
Securities issued pursuant to the Securitization.
15
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any
other nationally-recognized statistical rating agency which has been approved by
Lender.
"REGISTRATION STATEMENT" shall have the meaning set forth in Section
9.2(b) hereof.
"RELEASE" shall have the meaning set forth in the Environmental
Indemnity.
"RELEASE AMOUNT" shall mean, for an Individual Property, the product
of the Allocated Loan Amount for such Individual Property and one hundred
twenty-five percent (125%).
"RELEASED INDIVIDUAL PROPERTY" shall have the meaning set forth in
Section 2.5.2 hereof.
"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 each Individual Property, all
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, forfeited security deposits, 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 Individual Property, and
proceeds, if any, from business interruption or other loss of income insurance.
"REPLACED PROPERTY" shall have the meaning set forth in Section 2.7(a)
hereof.
"REPLACEMENT MANAGEMENT AGREEMENT" shall mean, collectively, (a)
either (i) a management agreement with a Qualifying Manager substantially in the
same form and substance as the Management Agreement, or (ii) a management
agreement with a Qualifying Manager, which management agreement shall be
acceptable to Lender in form and substance, provided, with respect to this
subclause (ii), Lender, at its option, may require that Borrower obtain
confirmation from the applicable Rating Agencies that such management agreement
will not result in a downgrade, withdrawal or qualification of the initial, or
if higher, then current rating of the Securities or any class thereof; and (b) a
conditional assignment of management agreement substantially in the form of the
Assignment of Management Agreement (or such other form acceptable to Lender),
executed and delivered to Lender by Borrower and such Qualifying Manager at
Borrower's expense.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in Section
7.3.1 hereof.
16
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall mean (i) $18,370.00, or
(ii) following the release of an Individual Property from the lien of its
related Security Instrument pursuant to Section 2.5 hereof or following the
release and substitution of an Individual Property pursuant to Section 2.7
hereof, an amount equal to (A) the aggregate square footage of all Improvements
at the Properties after giving effect to such release or substitution times (B)
$0.15, divided by 12.
"REPLACEMENTS" shall have the meaning set forth in Section 7.3.1
hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in the Cash
Management Agreement.
"REQUIRED REPAIR FUND" shall have the meaning set forth in Section
7.1.1 hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 7.1.1
hereof.
"RESERVE FUNDS" shall mean the Required Repair Fund, the Tax and
Insurance Escrow Fund, the Replacement Reserve Fund or any other escrow fund
established or required by the Loan Documents.
"RESTORATION" shall have the meaning set forth in Section 6.2 hereof.
"RESTRICTED PARTY" shall mean Borrower, SPC Party, Guarantor, Sponsor
or any affiliated Manager or any shareholder, partner, member or non-member
manager, or any direct or indirect legal or beneficial owner of, Borrower, SPC
Party, Guarantor, Sponsor, any affiliated Manager or any non-member manager.
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set forth in
Section 2.4.1(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 9.1 hereof.
"SECURITIES ACT" shall have the meaning set forth in Section 9.2(a)
hereof.
"SECURITIZATION" shall have the meaning set forth in Section 9.1
hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in Section
2.4.1(a)(vi) hereof.
"SECURITY INSTRUMENT" shall mean, with respect to each Individual
Property, that certain first priority Mortgage (or Deed of Trust or Deed to
Secure Debt, as applicable) and Security Agreement, executed and delivered by
Borrower as security for the Loan and encumbering such Individual Property, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"SERVICER" shall have the meaning set forth in Section 9.6 hereof.
17
"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.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies.
"SPC PARTY" shall have the meaning set forth in Section 4.1.30(o)
hereof.
"SPECIAL PURPOSE ENTITY" shall mean a Person which satisfies the
requirements of Section 4.1.30 hereof.
"SPONSOR" shall mean U-Store-It Trust, a Maryland real estate
investment trust.
"STATE" shall mean, with respect to an Individual Property, the State
or Commonwealth in which such Individual Property or any part thereof is
located.
"SUBSTITUTE PROPERTY" shall have the meaning set forth in Section
2.7(a) hereof.
"SUBSTITUTE SECURITY INSTRUMENT" shall have the meaning set forth in
Section 2.7(a) hereof.
"SUBSTITUTION" shall have the meaning set forth in Section 2.7(a)
hereof.
"SUBSTITUTION DATE" shall have the meaning set forth in Section
2.7(c)(iv) hereof.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.4.2
hereof.
"SURVEY" shall mean a survey of the Individual Property in question
delivered to Lender and which survey has been prepared by a surveyor licensed in
the State and satisfactory to Lender and the company or companies issuing the
Title Insurance Policies, and containing a certification of such surveyor
satisfactory to Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
Section 7.2 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof.
"TAX OPINION" shall mean an opinion of competent counsel to the effect
that a contemplated action (a) will not result in any deemed exchange pursuant
to Section 1001 of the Code of the Note; and (b) will not adversely affect the
Note status as indebtedness for Federal income tax purposes.
"TITLE INSURANCE POLICY" shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in the form (acceptable to
Lender) (or, if an Individual Property is in a State which does not permit the
issuance of such ALTA policy, such form as
18
shall be permitted in such State and acceptable to Lender) issued with respect
to such Individual Property and insuring the lien of the Security Instrument
encumbering such Individual Property.
"TRADED ENTITY" shall have the meaning set forth in Section 5.2.13(h)
hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State in which an Individual Property is
located.
"UNDEFEASED NOTE" shall have the meaning set forth in Section
2.4.1(a)(v) hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in Section 9.2(b)
hereof.
"U.S. OBLIGATIONS" shall mean direct non-callable obligations of the
United States of America.
"YIELD MAINTENANCE PREMIUM" shall mean the amount (if any) which, when
added to the remaining principal amount of the Note or the principal amount of a
Defeased Note, as applicable, will be sufficient to purchase U.S. Obligations
providing the required Scheduled Defeasance Payments.
SECTION .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.
GENERAL TERMS
SECTION .1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
.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.
.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 reborrowed.
.1.3 THE NOTE, SECURITY INSTRUMENTS AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Note and secured by the Security Instrument, the Assignment of
Leases and the other Loan Documents.
.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan to (a)
pay the cost of the acquisition of the Properties, (b) repay and discharge any
existing loans relating to the
19
Properties, (c) pay all past-due Basic Carrying Costs, if any, in respect of the
Properties, (d) make deposits into the Reserve Funds on the Closing Date in the
amounts provided herein, (e) pay costs and expenses incurred in connection with
the Closing of the Loan, as approved by Lender, (f) fund any working capital
requirements of the Properties, and (g) distribute the balance, if any, to
Borrower.
SECTION .2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
.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 Applicable Interest Rate.
.2.2 INTEREST CALCULATION. Interest on the outstanding principal balance of
the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year by (c) the outstanding
principal balance.
.2.3 PAYMENTS. Borrower shall pay to Lender (a) on the Closing Date, an
amount equal to interest only on the outstanding principal balance of the Loan
from the Closing Date up to but not including the eleventh day of the next
succeeding calendar month, (b) on September 11, 2005 and on each Payment Date
thereafter through and including the Payment Date occurring on August 11, 2007,
interest only on the outstanding principal balance of the Loan (the "INTEREST
ONLY PAYMENT AMOUNT"), and (c) on each Payment Date commencing with the Payment
Date occurring on September 11, 2007 up to and including the Maturity Date, an
amount equal to the Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest on the Loan for the prior Interest
Period and the balance to the outstanding principal of the Loan.
.2.4 INTENTIONALLY DELETED.
.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 Security
Instruments and the other Loan Documents.
.2.6 PAYMENTS AFTER DEFAULT. Upon the occurrence and during the continuance
of an Event of Default, (a) 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 and (b) Lender shall be entitled to receive and Borrower shall pay to
Lender on each Payment Date an amount equal to the Net Cash Flow After Debt
Service for the prior month, such amount to be applied by Lender to the payment
of the Debt in such order as Lender shall determine in its sole discretion,
including, without limitation, alternating applications thereof between interest
and principal. Interest at the Default Rate and Net Cash Flow After Debt Service
shall both be computed from the occurrence of the Event of Default until 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
20
itself accrue interest at the same rate as the Loan and shall be secured by the
Security Instruments. This paragraph shall not be construed as an agreement or
privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any
Event of Default; the acceptance of any payment of Net Cash Flow After Debt
Service shall not be deemed to cure or constitute a waiver of any Event of
Default; and Lender retains its rights under this Note to accelerate and to
continue to demand payment of the Debt upon the happening of any Event of
Default, despite any payment of Net Cash Flow After Debt Service.
.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 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
Security Instruments and the other Loan Documents to the extent permitted by
applicable law.
.2.8 USURY SAVINGS. This Agreement and the Note are subject to the express
condition that at no time shall Borrower be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
.2.9 MAKING OF PAYMENTS. Each payment by Borrower hereunder or under the
Note shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by
noon, New York City time, on the date such payment is due, to Lender by deposit
to such account as Lender may designate by written notice to Borrower. Whenever
any payment hereunder or under the Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the immediately preceding
Business Day.
.2.10 INDEMNIFIED TAXES.
(a) All payments made by Borrower hereunder shall be made free and clear
of, and without reduction for or on account of, Indemnified Taxes, excluding (i)
Indemnified Taxes measured by Lender's net income, and franchise taxes imposed
on it, by the jurisdiction under
21
the laws of which Lender is resident or organized, or any political subdivision
thereof, (ii) taxes measured by Lender's overall net income, and franchise taxes
imposed on it, by the jurisdiction of Lender's applicable lending office or any
political subdivision thereof or in which Lender is resident or engaged in
business, and (iii) withholding taxes imposed by the United States of America,
any State, commonwealth, protectorate territory or any political subdivision or
taxing authority thereof or therein as a result of the failure of Lender which
is a Non-U.S. Entity to comply with the terms of paragraph (b) below. If any non
excluded Indemnified Taxes are required to be withheld from any amounts payable
to Lender hereunder, the amounts so payable to Lender shall be increased to the
extent necessary to yield to Lender (after payment of all non excluded
Indemnified Taxes) interest or any such other amounts payable hereunder at the
rate or in the amounts specified hereunder. Whenever any non excluded
Indemnified Tax is payable pursuant to applicable law by Borrower, Borrower
shall send to Lender an original official receipt showing payment of such non
excluded Indemnified Tax or other evidence of payment reasonably satisfactory to
Lender. Borrower hereby indemnifies Lender for any incremental taxes, interest
or penalties that may become payable by Lender which may result from any failure
by Borrower to pay any such non excluded Indemnified Tax when due to the
appropriate taxing authority or any failure by Borrower to remit to Lender ender
the required receipts or other required documentary evidence.
(b) In the event that Lender or any successor and/or assign of Lender is
not incorporated under the laws of the United States of America or a State
thereof (a "NON-U.S. ENTITY") Lender agrees that, prior to the first date on
which any payment is due such entity hereunder, it will deliver to Borrower two
duly completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI or successor applicable form, as the case may be, certifying in each case
that such entity is entitled to receive payments under the Note, without
deduction or withholding of any United States Federal income taxes. Each entity
required to deliver to Borrower a Form W-8BEN or W-8ECI pursuant to the
preceding sentence further undertakes to deliver to Borrower two further copies
of such forms, or successor applicable forms, or other manner of certification,
as the case may be, on or before the date that any such form expires (which, in
the case of the Form W-8ECI, is the last day of each U.S. taxable year of the
Non-U.S. Entity) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to
Borrower, and such other extensions or renewals thereof as may reasonably be
requested by Borrower, certifying in the case of a Form W-8BEN or W-8ECI that
such entity is entitled to receive payments under the Note without deduction or
withholding of any United States Federal income taxes, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such entity from duly completing and delivering any such form with
respect to it and such entity advises Borrower that it is not capable of
receiving payments without any deduction or withholding of United States Federal
income tax.
SECTION .3 PREPAYMENTS.
.3.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided herein, Borrower
shall not have the right to prepay the Loan in whole or in part prior to the
Maturity Date. On May 11, 2012 (the "PERMITTED PREPAYMENT DATE") or on any
Payment Date thereafter, Borrower may, at its option and upon thirty (30) days
prior written notice to Lender, prepay the Debt in whole or in
22
part without payment of the Yield Maintenance Premium, provided, Borrower pays
to Lender all accrued and unpaid interest on the amount of principal being
prepaid through and including the date of prepayment. Any partial prepayment
shall be applied to the last payments of principal due under the Loan.
.3.2 MANDATORY PREPAYMENTS. On each date on which Borrower actually
receives any Net Proceeds, if Lender is not obligated to make such Net Proceeds
available to Borrower for the restoration of any Individual Property, Borrower
shall prepay the outstanding principal balance of the Note in an amount equal to
one hundred percent (100%) of such Net Proceeds. No Yield Maintenance 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.
.3.3 PREPAYMENTS AFTER DEFAULT. If, following an Event of Default, payment
of all or any part of the Debt is tendered by Borrower or otherwise recovered by
Lender, such tender or recovery shall be deemed a voluntary prepayment by
Borrower in violation of the prohibition against prepayment set forth in Section
2.3.1 hereof and, if such payment is made prior to the Permitted Prepayment
Date, Borrower shall pay, in addition to the Debt, (i) an amount equal to the
greater of (a) one percent (1%) of the outstanding principal amount of the Loan
to be prepaid or satisfied, or (b) the Yield Maintenance Premium that would be
required if a Defeasance Event had occurred in an amount equal to the
outstanding principal amount of the Loan to be satisfied or prepaid and (ii) all
accrued and unpaid interest on the amount of principal being prepaid through and
including the date of prepayment.
SECTION .4 DEFEASANCE.
.4.1 VOLUNTARY DEFEASANCE. (a) Provided no Event of Default shall then
exist, Borrower shall have the right at any time after the Permitted Release
Date to voluntarily defease all or any portion of the Loan by and upon
satisfaction of the following conditions (such event being a "DEFEASANCE
EVENT"):
(i) Borrower shall provide not less than thirty (30) days prior
written notice to Lender specifying the Payment Date (the "DEFEASANCE
DATE") on which the Defeasance Event will occur and the principal amount of
the Loan to be defeased;
(ii) Borrower shall pay to Lender all accrued and unpaid interest on
the principal balance of the Note to and including the Defeasance Date;
(iii) Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due under the Note, this
Agreement, the Security Instruments, and the other Loan Documents;
(iv) Borrower shall deliver to Lender the Defeasance Deposit
applicable to the Defeasance Event;
(v) In the event only a portion of the Loan is the subject of the
Defeasance Event, Borrower shall prepare all necessary documents to modify
this Agreement and to amend and restate the Note and issue two substitute
notes for the Note, one note having a
23
principal balance equal to the defeased portion of the original Note and a
maturity date equal to the Permitted Prepayment Date (the "DEFEASED NOTE")
and the other note having a principal balance equal to the undefeased
portion of the original Note and a maturity date equal to the Maturity Date
(the "UNDEFEASED NOTE"). The Defeased Note and the Undefeased Note shall
otherwise have terms identical to the original Note, except that a Defeased
Note cannot be the subject of any further Defeasance Event. The Undefeased
Note may be the subject of a further Defeasance Event in accordance with
the terms and provisions of this Section 2.4 (the term "Note", as used in
this clause (v) for such purpose, being deemed to refer to the Undefeased
Note that is the subject of further defeasance), provided, however, that no
such partial defeasance shall take place unless the conditions outlined in
Section 2.5 are satisfied;
(vi) Borrower shall execute and deliver a security agreement, in a
form and substance that would be reasonably satisfactory to a prudent
institutional lender, creating a first priority lien on the Defeasance
Deposit and the U.S. Obligations purchased with the Defeasance Deposit in
accordance with the provisions of this Section 2.4 (the "SECURITY
AGREEMENT");
(vii) Borrower shall deliver an opinion of counsel for Borrower in a
form and substance that would be reasonably satisfactory to a prudent
institutional lender stating, among other things, that Borrower has legally
and validly transferred and assigned the U.S. Obligations and all
obligations, rights and duties under and to the Note or the Defeased Note
(as applicable) to the Successor Borrower, that Lender has a perfected
first priority security interest in the Defeasance Deposit and the U.S.
Obligations delivered by Borrower and that any REMIC Trust formed pursuant
to a Securitization will not fail to maintain its status as a "real estate
mortgage investment conduit" within the meaning of Section 860D of the Code
as a result of such Defeasance Event;
(viii) Borrower shall deliver confirmation in writing from the
applicable Rating Agencies to the effect that such defeasance and release
will not result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to such Defeasance Event for
the Securities issued in connection with the Securitization which are then
outstanding. If required by the applicable Rating Agencies, Borrower shall
also deliver or cause to be delivered a non-consolidation opinion with
respect to the Successor Borrower in form and substance satisfactory to
Lender and the applicable Rating Agencies;
(ix) Borrower shall deliver an Officer's Certificate certifying that
the requirements set forth in this Section 2.4.1(a) have been satisfied;
(x) Borrower shall deliver a certificate of an Acceptable Accountant
certifying that the U.S. Obligations purchased with the Defeasance Deposit
generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments;
(xi) Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request; and
24
(xii) Borrower shall pay all costs and expenses of Lender incurred in
connection with the Defeasance Event, including, without limitation, (A)
any costs and expenses associated with a release of the Lien of the related
Security Instrument as provided in Section 2.5 hereof, (B) Lender's
reasonable attorneys' fees and expenses, (C) the costs and expenses of the
Rating Agencies, (D) any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of the Note, or
otherwise required to accomplish the defeasance and (E) the reasonable
costs and expenses actually incurred by Servicer and any trustee, including
reasonable attorneys' fees.
(b) In connection with each Defeasance Event, Borrower hereby
appoints Lender as its agent and attorney-in-fact for the purpose of using the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as possible to, all successive scheduled payment dates
after the Defeasance Date upon which interest and principal payments are
required under the Note, in the case of a Defeasance Event for the entire
outstanding principal balance of the Loan, or the Defeased Note, in the case of
a Defeasance Event for only a portion of the outstanding principal balance of
the Loan, as applicable, and in amounts equal to the scheduled payments due on
such dates under this Agreement and the Note or the Defeased Note, as
applicable, (including without limitation scheduled payments of principal,
interest, servicing fees (if any), the Rating Surveillance Charge and any other
amounts due under the Loan Documents on such dates) and assuming such Note or
Defeased Note, as applicable, is prepaid in full on the Permitted Prepayment
Date (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower, pursuant to the Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations may be made directly to the Lockbox
Account (unless otherwise directed by Lender) and applied to satisfy the
obligations of Borrower under the Note or the Defeased Note, as applicable. Any
portion of the Defeasance Deposit in excess of the amount necessary to purchase
the U.S. Obligations required by this Section 2.4 and satisfy Borrower's other
obligations under this Section 2.4 and Section 2.5 hereof shall be remitted to
Borrower.
.4.2 SUCCESSOR BORROWER. In connection with any Defeasance Event, Borrower
shall establish or designate a successor entity (the "SUCCESSOR BORROWER") which
shall be a single purpose bankruptcy remote entity with one (1) Independent
Director approved by Lender (two (2) if required by any Rating Agency), and
Borrower shall transfer and assign all obligations, rights and duties under and
to the Note or the Defeased Note, as applicable, together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note or the Defeased Note, as applicable, and the Security
Agreement and Borrower shall be relieved of its obligations under such documents
and the other Loan Documents, except with respect to those obligations which are
expressly stated to survive. Borrower shall pay $1,000 to any such Successor
Borrower as consideration for assuming the obligations under the Note or the
Defeased Note, as applicable, and the Security Agreement. Notwithstanding
anything in this Agreement to the contrary, no other assumption fee shall be
payable upon a transfer of the Note or the Defeased Note, as applicable, in
accordance with this Section 2.4.2, but Borrower shall pay all costs and
expenses incurred by Lender, including Lender's attorneys' fees and expenses,
incurred in connection therewith.
25
SECTION .5 RELEASE OF PROPERTY. Except as set forth in Section 2.4 hereof
and this Section 2.5, no repayment, prepayment or defeasance of all or any
portion of the Note shall cause, give rise to a right to require, or otherwise
result in, the release of any Lien of any Security Instrument on any Individual
Property.
.5.1 RELEASE OF ALL PROPERTIES.
(a) After the Permitted Release Date, if Borrower has elected to defease
the entire Loan and the applicable requirements of Section 2.4 hereof and this
Section 2.5 have been satisfied, all of the Properties shall be released from
the Liens of their respective Security Instruments and the U.S. Obligations,
pledged pursuant to the Security Agreement, shall be the sole source of
collateral securing the Note.
(b) In connection with the release of the Security Instruments, Borrower
shall submit to Lender, not less than thirty (30) days prior to the Defeasance
Date, a release of Lien (and related Loan Documents) for each Individual
Property for execution by Lender. Such release shall be in a form appropriate in
each jurisdiction in which an Individual Property is located and that would be
satisfactory to a prudent institutional lender. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all applicable
Legal Requirements, and (ii) will, following execution by Lender and recordation
thereof, effect such releases in accordance with the terms of this Agreement.
.5.2 RELEASE OF INDIVIDUAL PROPERTY. After the Permitted Release Date, if
Borrower has elected to defease a portion of the Loan and the applicable
requirements of Section 2.4 hereof and this Section 2.5 have been satisfied,
Borrower may obtain the release of an Individual Property from the Lien of the
Security Instrument thereon (and related Loan Documents) and the release of
Borrower's obligations under the Loan Documents with respect to such Individual
Property (other than those expressly stated to survive), upon the satisfaction
of each of the following conditions:
(a) The principal balance of the Defeased Note shall equal or exceed the
Release Amount for the applicable Individual Property; provided, however, if the
undefeased portion of the Loan at the time a release is requested is less than
the Release Amount, the Defeased Note shall equal the remaining undefeased
portion of the Loan at the time of release;
(b) Borrower shall provide Lender with at least thirty (30) days but no
more than ninety (90) days prior written notice of its request to obtain a
release of the Individual Property;
(c) Borrower shall defease the portion of the Note equal to the Release
Amount of the Individual Property being released (together with all accrued and
unpaid interest on the principal amount being defeased) in accordance with the
terms and conditions of Sections 2.4.1 and 2.4.2 hereof;
(d) Borrower shall submit to Lender, not less than thirty (30) days prior
to the date of such release, a release of Lien (and related Loan Documents) for
such Individual Property for execution by Lender. Such release shall be in a
form appropriate in each jurisdiction in which
26
the Individual Property is located and that would be satisfactory to a prudent
institutional lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all applicable Legal
Requirements, (ii) will, following execution by Lender and recordation thereof,
effect such release in accordance with the terms of this Agreement, and (iii)
will not impair or otherwise adversely affect the Liens, security interests and
other rights of Lender under the Loan Documents not being released (or as to the
parties to the Loan Documents and Properties subject to the Loan Documents not
being released);
(e) After giving effect to such release, the Debt Service Coverage Ratio
for the Properties then remaining subject to the Lien of the Security Instrument
shall be at least equal to the Debt Service Coverage Ratio for all of the
Properties (including the Individual Property to be released) for the twelve
(12) full calendar months immediately preceding the release of such Individual
Property.
(f) Intentionally Deleted;
(g) Lender shall have received evidence that the Individual Property to be
released shall be conveyed to a Person other than Borrower or SPC Party;
(h) Lender shall have received payment of all Lender's costs and expenses,
including due diligence review costs and reasonable counsel fees and
disbursements incurred in connection with the release of the Individual Property
from the lien of the related Security Instrument and the review and approval of
the documents and information required to be delivered in connection therewith;
and
(i) Immediately following such release, the Allocated Loan Amount of the
Individual Property released (the "RELEASED INDIVIDUAL PROPERTY") shall be
reduced to zero and the Allocated Loan Amounts of the Individual Properties
remaining subject to the Lien of a Security Instrument immediately following
such release shall be reduced pro rata by the difference between the Release
Amount of the Released Individual Property and the original Allocated Loan
Amount of the Released Individual Property.
.5.3 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 the Note and this Agreement, release
the Lien of the Security Instrument on each Individual Property not theretofore
released.
SECTION .6 MANNER OF MAKING PAYMENTS; CASH MANAGEMENT.
.6.1 DEPOSITS INTO LOCKBOX ACCOUNT. Borrower shall cause all Rents from the
Properties to be deposited into the Lockbox Account in accordance with the Cash
Management Agreement. Without limitation of the foregoing, Borrower shall, and
shall cause Manager to, (a) cause or direct all tenants under Leases to deliver
all Rents payable thereunder either directly to the Lockbox Account or to
Manager for deposit into the Lockbox Account, and (b) deposit all amounts
received by Borrower or Manager constituting Rents or other revenue of any kind
from
27
the Properties into the Lockbox Account within one (1) Business Day of receipt
thereof. Disbursements from the Lockbox Account will be made in accordance with
the terms and conditions of this Agreement and the Cash Management Agreement.
Lender shall have sole dominion and control over the Lockbox Account and, except
as set forth in the Cash Management Agreement, Borrower shall have no rights to
make withdrawals therefrom.
.6.2 PAYMENTS RECEIVED IN THE LOCKBOX ACCOUNT. Notwithstanding anything to
the contrary contained in this Agreement or the other Loan Documents and
provided no Event of Default then exists, Borrower's obligations with respect to
the Interest Only Payment Amount, the Monthly Debt Service Payment Amount and
amounts due for the Reserve Funds shall be deemed satisfied to the extent
sufficient amounts are deposited in the Lockbox Account to satisfy such
obligations on the dates each such payment is required, regardless of whether
any of such amounts are so applied by Lender.
.6.3 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.
SECTION .7 SUBSTITUTE PROPERTY.
(a) Generally. Subject to the conditions in this Section 2.7, at any time
and from time to time, Borrower may substitute (each such act is hereafter
referred to as a "SUBSTITUTION") a property (a "SUBSTITUTE PROPERTY") for an
Individual Property (a "REPLACED PROPERTY"). From and after the substitution of
a Substitute Property in accordance herewith, such Substitute Property shall
thereafter be deemed an Individual Property under this Agreement and the
Security Instrument, and the Allocated Loan Amount of such Substitute Property
shall be the same as the Allocated Loan Amount of the Replaced Property, except
that in the event that two (2) or more Substitute Properties replace a single
Replaced Property, then in that event, the Allocated Loan Amount of the Replaced
Property shall be apportioned between or amongst the Substitute Properties as
Lender in its sole discretion decides. In the event of a substitution, the Note
shall remain in full force and effect and a new Security Instrument encumbering
the Substitute Property (the "SUBSTITUTE SECURITY INSTRUMENT") shall be executed
and delivered by Borrower to Lender to encumber the Substitute Property.
Concurrently with the completion of all steps necessary to substitute a
Substitute Property as provided herein, Lender shall execute or cause to be
executed all such documents as are necessary or appropriate (i) to release all
Liens granted to Lender and affecting the Replaced Property, and (ii) to cause
the Substitute Security Instrument to be cross-collateralized and
cross-defaulted with the Security Instrument. Notwithstanding anything to the
contrary hereinbefore contained, Borrower's right to substitute a Property as
herein provided shall be subject to the additional limitation that at any time
the Allocated Loan Amount of such Substitute Property, individually or when
aggregated with the Allocated Loan Amounts of all other Properties which are or
were a Substitute Property shall not constitute more than 33 1/3 % of the
original outstanding principal amount of the Loan.
(b) Substitute Property Requirements. To qualify as a Substitute Property,
the property nominated to be a Substitute Property must, at the time of
substitution:
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(i) be a property as to which Borrower will hold indefeasible fee
title free and clear of any lien or other encumbrance except for Permitted
Encumbrances;
(ii) be free and clear of Hazardous Substance except for nominal
amounts of any such substances commonly incorporated in or used in the
operation of properties similar to the Properties (in either case in
compliance with all Environmental Laws), all as set forth in an
environmental report delivered to Lender;
(iii) be in substantially the same repair and condition, which shall
be certified by an Officer's Certificate of Borrower, as the Replaced
Property was on the Closing Date or, in the event that the Replaced
Property was itself a Substitute Property, on the date that such Property
became a Property hereunder all as set forth in a Physical Conditions
Report delivered to Lender;
(iv) be in compliance, in all material respects, with Legal
Requirements which shall be certified in an Officer's Certificate;
(v) as evidenced by an Approved Appraisal performed at Borrower's
expense and delivered to Lender, have a fair market value no less than the
greater of (y) the fair market value of the Replaced Property on the
Closing Date or (z) the fair market value of the Replaced Property
immediately prior to the Substitution;
(vi) be used primarily for self-service storage and related uses; and
(vii) after giving effect to the Substitution, the Debt Service
Coverage Ratio for all of the Properties (including the Substitute
Property, but excluding the Replaced Property) shall be at least equal to
the Debt Service Coverage Ratio for all of the Properties (including the
Replaced Property) for the twelve (12) full calendar months immediately
preceding the release and substitution of such Individual Property.
(c) Conditions to Substitution. In addition to the requirements in Section
2.7(b) above, substitution of any Property pursuant to this Section 2.7 shall be
subject to the satisfaction of the following, all of which shall be prepared or
obtained at Borrower's expense:
(i) simultaneously with the Substitution, Borrower shall convey fee
simple title to the Replaced Property to a Person other than Borrower;
(ii) Intentionally Deleted;
(iii) Intentionally Deleted;
(iv) receipt by Lender and the Rating Agencies of written notice
thereof from Borrower at least thirty (30) days before the date of the
proposed Substitution (the "SUBSTITUTION DATE"), together with (1) written
evidence that the property proposed to be a Substitute Property complies
with Section 2.7(b) above and (2) such other information, including
financial information, as Lender or the Rating Agencies may request;
29
(v) Lender's receipt of written affirmation from the Rating Agencies
that the ratings of the Securities immediately prior to such Substitution
will not be qualified, downgraded or withdrawn as a result of such
Substitution, which affirmation may be granted or withheld in the Rating
Agencies' sole and absolute discretion;
(vi) delivery to Lender of an opinion of counsel opining as to the
enforceability of the Substitute Security Instrument with respect to the
Substitute Property in substantially the same form and substance as the
opinion of counsel concerning enforceability originally delivered at the
Closing Date in connection with the Replaced Property, with reasonable
allowance for variations in applicable State law, and a Nondisqualification
Opinion and a Tax Opinion;
(vii) no Event of Default shall have occurred and be continuing;
(viii) the representations and warranties set forth in this Agreement,
in the Security Instrument and the Loan Documents applicable to the
Replaced Property shall be true and correct (except as to title exceptions)
as to the Substitute Property on the Substitution Date in all material
respects;
(ix) delivery to Lender of a copy of the organizational documents of
Borrower and all amendments thereto, certified as true, complete and
correct as of the date of delivery by an Officer's Certificate; a
certificate from the secretary of the State or other applicable State
official or officer in Borrower's State of formation certifying that it is
duly formed and in good standing (with tax clearance, if applicable), if
available, and certificates from the Secretary of State of the State in
which the Substitute Property is located (if such certificates are issued),
certifying as to Borrower's good standing as a limited liability company in
such State (with tax clearance, if applicable); delivery of an Officer's
Certificate, dated the Substitution Date and signed on behalf of its
Secretary or Assistant Secretary, certifying the names of the officers of
the general partner of the sole member of Borrower authorized to execute
and deliver, in the name and on behalf of Borrower, the Security
Instrument, Assignment of Leases, UCC Financing Statements, and the other
Loan Documents pertaining to such Substitute Property to which Borrower is
a party, together with the original (not photocopied) signatures of such
officers;
(x) delivery to Lender of an Officer's Certificate certifying to the
veracity of the statements in Subsections 2.7(b)(ii), 2.7(b)(iii),
2.7(b)(iv), 2.7(b)(vii), 2.7(c)(viii), and 2.7(c)(ix) hereof;
(xi) delivery to Lender of originals of the following:
(1) Borrower shall have executed, acknowledged and delivered to
Lender a Security Instrument, an Assignment of Leases and
two UCC Financing Statements (to the extent execution and
acknowledgment are required) with respect to the Substitute
Property, together with a letter from Borrower countersigned
by a title insurance company acknowledging receipt of such
Security Instrument,
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Assignment of Leases and UCC-1 Financing Statements and
agreeing to record or file, as applicable, such Security
Instrument, Assignment of Leases and Rents and, with regard
to the UCC-1 Financing Statements, if recordation or a
system of filing is accepted or established in the
applicable jurisdiction, one of the UCC-1 Financing
Statements in the real estate records for the county in
which the Substitute Property is located and, subject to
local law, rule or custom, to file one of the UCC-1
Financing Statements in the office of the Secretary of State
of the State in which Borrower has been formed, so as to
effectively create upon such recording and filing valid and
enforceable Liens upon the Substitute Property, of the
requisite priority, in favor of Lender (or such other
trustee as may be desired under local law), subject only to
the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents. The Security
Instrument, Assignment of Leases and UCC-1 Financing
Statements shall be the same in form and substance as the
counterparts of such documents executed and delivered with
respect to the related Replaced Property subject to
modifications reflecting the Substitute Property as the
Property that is the subject of such documents and such
modifications reflecting the laws of the State in which the
Substitute Property is located as shall be recommended by
the counsel admitted to practice in such State and
delivering the opinion of counsel as to the enforceability
of such documents required pursuant to this Section. The
Security Instrument encumbering the Substitute Property
shall secure all amounts evidenced by the Note, provided
that in the event that the jurisdiction in which the
Substitute Property is located imposes a mortgage recording,
intangibles or similar tax and does not permit the
allocation of indebtedness for the purpose of determining
the amount of such tax payable, the principal amount secured
by such Security Instrument shall be equal to one hundred
fifty percent (150%) of the amount of the Loan allocated to
the Substitute Property;
(2) Lender shall have received (A) any "tie-in" or similar
endorsement to each Title Insurance Policy insuring the Lien
of the Security Instrument as of the date of the
substitution available with respect to the Title Insurance
Policy insuring the Lien of the Security Instrument with
respect to the Substitute Property and (B) a Title Insurance
Policy (or a marked, signed and redated commitment to issue
such Title Insurance Policy) insuring the Lien of the
31
Security Instrument encumbering the Substitute Property,
issued by the title company that issued the Title Insurance
Policies insuring the Lien of the Security Instrument and
dated as of the date of the substitution, with reinsurance
and direct access agreements that replace such agreements
issued in connection with the Title Insurance Policy
insuring the Lien of the Security Instrument encumbering the
Replaced Property. The Title Insurance Policy issued with
respect to the Substitute Property shall (1) provide
coverage in the amount of the Release Amount applicable to
the Substitute Property if the "tie-in" or similar
endorsement described above is available or, if such
endorsement is not available, in an amount equal to one
hundred fifty percent (150%) of the Release Amount
applicable for the Substitute Property, (2) insure Lender
that the relevant Security Instrument creates a valid first
lien on the Substitute 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), (3)
contain such legally available endorsements and affirmative
coverages as are contained in the Title Insurance Policies
insuring the Liens of the existing Security Instrument, and
(4) name Lender as the insured. Lender also shall have
received copies of paid receipts showing that all costs of
or premiums for such endorsements and Title Insurance
Policies have been paid;
(3) a current as-built land title Survey and a certificate from
a professional licensed land surveyor with respect to such
Substitute Property, certified to the Title Company and
Lender, and prepared in accordance with the 1999 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title
Surveys meeting the classification of an "Urban Survey" and
the following additional items from the list of "Optional
Survey Responsibilities and Specifications" (Table A) shall
be added to each survey 2, 3, 4, 6, 8, 9, 10, 11(a) (as to
utilities, surface matters only) and 13, and showing the
location, dimensions and area of each parcel of the
Substitute Property, including all existing buildings and
improvements, utilities, parking areas and spaces, internal
streets, if any, external streets, rights-of-way, as well as
any easements, setback violations or encroachments on such
Substitute Property and identifying each item with its
corresponding exception, if any, in the title policy
relating thereto. Each survey shall contain the original
signature and seal of the surveyor and any additional matter
required
32
by the Title Company. In addition, Borrower shall provide
with respect to each Substitute Property a certificate of a
professional land surveyor to the effect that the
Improvements located upon such Substitute Property are not
located in a flood plain area, or, if such Substitute
Property is in a flood plain area, Borrower shall deliver on
the Closing Date evidence of flood insurance;
(4) a certified copy of a deed conveying to Borrower all right,
title and interest in and to the Replaced Property and a
letter from a title insurance company acknowledging receipt
of such deed and agreeing to record such deed in the real
estate records for the county in which the Replaced Property
is located;
(5) insurance certificates issued by insurance companies
evidencing the insurance coverage required under Section 6.1
hereof;
(6) a Phase I environmental report issued by a qualified
environmental consultant at Borrower's expense, and, if
recommended by the Phase I environmental report, a Phase II
environmental report, which conclude that the Substitute
Property does not contain any Hazardous Substance except for
nominal amounts of such substances commonly incorporated in
or used in the operation of properties similar to the
Substitute Property (in either case in compliance with all
Environmental Laws). If any such report discloses the
presence of any Hazardous Substance, such report shall
include an estimate of the cost of any related remediation
and Borrower shall deposit with Lender an amount equal to
one hundred fifty percent (150%) of such estimated cost,
which deposit shall constitute additional security for the
Loan and shall be released to Borrower upon the delivery to
Lender of (A) an update to such report indicating that there
is no longer any Hazardous Substance on the Substitute
Property except for nominal amounts of such substances
commonly incorporated in or used in the operation of
properties similar to the Substitute Property (in either
case in compliance with all Environmental Laws) and (B) paid
receipts indicating that the costs of all such remediation
work have been paid;
(7) payments of or reimbursement for all costs and expenses
incurred by Lender (including, without limitation,
reasonable attorneys' fees and disbursements) in connection
with the substitution, and Borrower shall have paid all
recording charges, filing fees, taxes or other expenses
(including, without limitation, mortgage and
33
intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. Borrower shall have paid
all costs and expenses of the Rating Agencies incurred in
connection with the substitution;
(8) an endorsement to the Title Insurance Policy insuring the
Lien of the Security Instrument encumbering the Substitute
Property insuring that the Substitute Property constitutes a
separate tax lot or, if such an endorsement is not available
in the State in which the Substitute Property is located, a
letter from the title insurance company issuing such Title
Insurance Policy or of an opinion of competent counsel in
the State where such Substitute Property is located, stating
that the Substitute Property constitutes a separate tax lot
or a letter from the appropriate authority stating that the
Substitute Property constitutes a separate tax lot;
(9) a Physical Conditions Report with respect to the Substitute
Property stating that the Substitute Property and its use
comply in all material respects with all applicable Legal
Requirements (including, without limitation, zoning,
subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of damage
or waste. If compliance with any Legal Requirements are not
addressed by the Physical Conditions Report, such compliance
shall be confirmed by delivery to Lender of a certificate of
an architect licensed in the State in which the Substitute
Property is located, a letter from the municipality in which
such Property is located, a certificate of a surveyor that
is licensed in the State in which the Substitute Property is
located (with respect to zoning and subdivision laws), an
ALTA 3.1 zoning endorsement to the Title Insurance Policy
delivered pursuant to clause (2) above (with respect to
zoning laws) or a subdivision endorsement to the Title
Insurance Policy delivered pursuant to clause (2) above
(with respect to subdivision laws). If the Physical
Conditions Report recommends that any repairs be made with
respect to the Substitute Property, such Physical Conditions
Report shall include an estimate of the cost of such
recommended repairs and Borrower shall deposit with Lender
an amount equal to one hundred twenty-five percent (125%) of
such estimated cost, which deposit shall constitute
additional security for the Loan and shall be released to
Borrower upon the delivery to Lender of (A) an update to
such Physical Conditions Report or a letter from engineer
that prepared such Physical Conditions Report indicating
that the recommended repairs were completed in
34
good manner and (B) paid receipts indicating that the costs
of all such repairs have been paid;
(10) annual operating statements and occupancy statements for the
Substitute Property for the most current completed fiscal
year and a current operating statement for the Replaced
Property, each certified to Lender as being true and
correct, and a certificate from Borrower certifying that
there has been no adverse change in the financial condition
of the Substitute Property since the date of such operating
statements;
(12) a release of Lien (and related Loan Documents) for the
Replaced Property for execution by Lender. Such release
shall be in a form appropriate for the jurisdiction in which
the Replaced Property is located; and
(13) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the
substitution as the Rating Agencies may have requested.
CONDITIONS PRECEDENT
SECTION.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:
.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.
.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.
.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES.
(a) SECURITY INSTRUMENT, ASSIGNMENT OF LEASES AND OTHER LOAN DOCUMENTS.
Lender shall have received from Borrower fully executed and acknowledged
counterparts of the Security Instrument and the Assignment of Leases and
evidence that counterparts of the Security Instrument and Assignment of Leases
have been delivered to the title company for recording, in the reasonable
judgment of Lender, so as to effectively create upon such recording valid and
enforceable liens upon each Individual Property, of the requisite priority, in
favor of Lender (or
35
such other trustee as may be required or desired under local law), subject only
to the Permitted Encumbrances and such other Liens as are permitted pursuant to
the Loan Documents. Lender shall have also received from (i) Borrower fully
executed counterparts of the Environmental Indemnity, Cash Management Agreement
and Assignment of Management Agreement and (ii) Guarantor, a fully executed
counterpart of the Guaranty.
(b) TITLE INSURANCE. Lender shall have received Title Insurance Policies
issued by a title company acceptable to Lender and dated as of the Closing Date,
with reinsurance and direct access agreements acceptable to Lender. Such Title
Insurance Policies shall (i) provide coverage in amounts satisfactory to Lender,
(ii) insure Lender that the applicable Security Instrument creates a valid lien
on the Individual Property encumbered thereby of the requisite priority, free
and clear of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the terms of
any endorsements), (iii) contain such endorsements and affirmative coverages as
Lender may reasonably request, and (iv) name Lender as the insured. The Title
Insurance Policies shall be assignable. Lender also shall have received evidence
that all premiums in respect of such Title Insurance Policies have been paid.
(c) SURVEY. Lender shall have received a current title Survey for each
Individual Property, certified to the title company and Lender and their
successors and assigns, in form and content satisfactory to Lender and prepared
by a professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. The Surveys shall show the following additional items from the
list of "Optional Survey Responsibilities and Specifications" (Table A) should
be added to each survey: 2, 3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, 11(a) (as to
utilities, surface matters only) and 13. Each such Survey shall reflect the same
legal description contained in the Title Insurance Policy relating to such
Individual Property referred to in clause (ii) above and shall include, among
other things, a metes and bounds description of the real property comprising
part of such Individual 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 accordance with the 1999 Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys 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 each Individual Property, in each case satisfactory to
Lender.
(f) ZONING. With respect to each Individual Property, Lender shall have
received, at Lender's option, (i) letters or other evidence with respect to each
Individual Property from the appropriate municipal authorities (or other
Persons) concerning applicable zoning and building laws, (ii) an ALTA 3.1 zoning
endorsement for the applicable Title Insurance Policy or (iii) a zoning opinion
letter, in each case in substance reasonably satisfactory to Lender.
36
(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 as
of the Closing Date with respect to each Security Instrument on the applicable
Individual Property, 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.
.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 parties thereto and
Lender shall have received and approved certified copies thereof.
.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.
.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have received opinions of
Borrower's counsel (a) with respect to non-consolidation issues, and (b) with
respect to due execution, authority, enforceability of the Loan Documents and
such other matters as Lender may require, all such opinions in form, scope and
substance satisfactory to Lender and Lender's counsel in their sole discretion.
.1.7 BUDGETS. Borrower shall have delivered to Lender the Annual Budget for
the current Fiscal Year.
.1.8 BASIC CARRYING COSTS. Borrower shall have paid all Basic Carrying
Costs relating to the Properties which are in arrears, including without
limitation, (a) accrued but unpaid insurance premiums relating to the
Properties, (b) currently due Taxes (including any in arrears) relating to the
Properties, and (c) currently due Other Charges relating to the Properties,
which amounts shall be funded with proceeds of the Loan.
.1.9 COMPLETION OF PROCEEDINGS. All corporate and other 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 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.
.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.
.1.11 TENANT ESTOPPELS. Lender shall have received an executed tenant
estoppel letter, which shall be in form and substance satisfactory to Lender,
from each tenant under a Major Lease.
37
.1.12 TRANSACTION COSTS. Borrower shall have paid or reimbursed Lender for
all title insurance premiums, recording and filing fees, costs of environmental
reports, Physical Conditions 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.
.1.13 MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
Effect on the financial condition or business condition of Borrower or the
Properties since the date of the most recent financial statements delivered to
Lender. The income and expenses of the Properties, the occupancy and Leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. Neither Borrower nor any of its
constituent Persons shall be the subject of any bankruptcy, reorganization, or
insolvency proceeding.
.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 Properties. Lender shall
have received a current certified rent roll of the Properties, reasonably
satisfactory in form and substance to Lender.
.1.15 TAX LOT. Lender shall have received evidence that each Individual
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
.1.16 PHYSICAL CONDITIONS REPORTS. Lender shall have received Physical
Conditions Reports with respect to each Individual Property, which reports shall
be reasonably satisfactory in form and substance to Lender.
.1.17 MANAGEMENT AGREEMENT. Lender shall have received a certified copy of
the Management Agreement with respect to the Properties which shall be
satisfactory in form and substance to Lender.
.1.18 APPRAISAL. Lender shall have received an appraisal of each Individual
Property, which shall be satisfactory in form and substance to Lender.
.1.19 FINANCIAL STATEMENTS. Lender shall have received a balance sheet with
respect to each Individual Property for the two most recent Fiscal Years and
statements of income and statements of cash flows with respect to each
Individual Property for the three most recent Fiscal Years, each in form and
substance satisfactory to Lender.
.1.20 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 satisfactory to Lender and its counsel.
REPRESENTATIONS AND WARRANTIES
SECTION.1 BORROWER REPRESENTATIONS.
38
Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
.1.1 ORGANIZATION. Borrower has been duly organized and is validly existing
and in good standing with requisite power and authority to own its properties
and to transact the businesses in which it is now engaged. Borrower is duly
qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, businesses and
operations. Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own its properties and to
transact the businesses in which it is now engaged, and the sole business of
Borrower is the ownership, management and operation of the Properties. Schedule
4.1.1 attached hereto accurately depicts the organizational structure of
Borrower.
.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).
.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.
.1.4 LITIGATION. Except as set forth on Schedule 4.1.4 attached hereto and
made a part hereof 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 any Individual Property, which
actions, suits or proceedings, if determined against Borrower or any Individual
Property, might materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership of any
Individual Property.
.1.5 AGREEMENTS. Borrower is not a party to any agreement or instrument or
subject to any restriction which might materially and adversely affect Borrower
or any Individual Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower is not in default in
any material respect in the performance, observance or
39
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 any of
the Properties 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 Properties
is otherwise bound, other than (a) obligations incurred in the ordinary course
of the operation of the Properties and specifically permitted under this
Agreement and (b) obligations under the Loan Documents. Set forth on Schedule
4.1.5 attached hereto are the material agreements to which Borrower is a party
or by which Borrower or any of the Properties are bound. Each such material
agreement is cancellable without penalty or premium on no more than thirty (30)
days notice unless otherwise specifically set forth on such Schedule 4.1.5.
.1.6 TITLE. Borrower has good, marketable and insurable fee simple title to
the real property comprising part of each Individual Property and good title to
the balance of such Individual 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. Each Security
Instrument, when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected lien on the applicable Individual
Property, subject only to Permitted Encumbrances and the Liens created by the
Loan Documents and (b) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. There are no claims for
payment for work, labor or materials affecting the Properties which are or may
become a lien prior to, or of equal priority with, the Liens created by the Loan
Documents.
.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) has
received reasonably equivalent value in exchange for its obligations under the
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 incur
debt and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such debt and liabilities as they mature (taking into
account the timing and amounts of cash to be received by Borrower and the
amounts to be payable on or in respect of obligations of Borrower). No petition
under the Bankruptcy Code or similar State bankruptcy or insolvency law has been
filed against Borrower or any constituent Person in the last seven (7) years,
and neither Borrower nor any constituent Person in the last seven (7) years has
ever made an assignment for the benefit of creditors or taken advantage of any
insolvency act for the benefit of debtors. Neither Borrower nor any of its
constituent Persons are contemplating either the filing of a petition by it
under the Bankruptcy Code or similar State bankruptcy or insolvency law or the
liquidation of all or a major portion of
40
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.
.1.8 FULL AND ACCURATE DISCLOSURE. No statement of fact made by Borrower in
this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to Lender which
adversely affects, nor as far as Borrower can foresee, might adversely affect,
any Individual Property or the business, operations or condition (financial or
otherwise) of Borrower.
.1.9 NO PLAN ASSETS. Borrower is not a Plan and none of the assets of
Borrower constitute or will constitute "Plan Assets" of one or more Plans. 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 Agreement.
.1.10 COMPLIANCE. Borrower and the Properties and the use thereof comply in
all material respects with all applicable Legal Requirements, including, without
limitation, Environmental Laws, 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 actual knowledge, any other Person in occupancy of or
involved with the operation or use of the Properties any act or omission
affording the Federal government or any other Governmental Authority the right
of forfeiture as against any Individual 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.
.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 Borrower and the Properties (i) are
true, complete and correct in all material respects, (ii) accurately represent
the financial condition of Borrower and the Properties, as applicable, as of the
date of such reports, and (iii) to the extent prepared or audited by an
Acceptable Accountant, have been prepared in accordance with GAAP throughout the
periods covered, except as disclosed therein. Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a Material Adverse
Effect on any Individual Property or the operation thereof in the manner
currently operated, except as referred to or reflected in said financial
statements. Since the date of such financial statements, there has been no
Material Adverse Effect on the financial condition, operations or business of
Borrower from that set forth in said financial statements.
.1.12 CONDEMNATION. No Condemnation or other similar proceeding has been
commenced or, to the best of Borrower's knowledge, is contemplated with respect
to all or any
41
portion of any Individual Property or for the relocation of roadways providing
access to any Individual Property.
.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.
.1.14 UTILITIES AND PUBLIC ACCESS. Each Individual Property has rights of
access to public ways and is served by public water, sewer, sanitary sewer and
storm drain facilities adequate to service such Individual Property for its
respective intended uses. All public utilities necessary or convenient to the
full use and enjoyment of each Individual Property are located either in the
public right-of-way abutting such Individual Property (which are connected so as
to serve such Individual Property without passing over other property) or in
recorded easements serving such Individual Property and such easements are set
forth in and insured by the Title Insurance Policies. All roads necessary for
the use of each Individual Property for their current respective purposes have
been completed, are physically open and are dedicated to public use and have
been accepted by all Governmental Authorities.
.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
.1.16 SEPARATE LOTS. Each Individual 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 such Individual Property.
.1.17 ASSESSMENTS. There are no pending or proposed special or other
assessments for public improvements or otherwise affecting any Individual
Property, nor, has Borrower received any notice of any contemplated improvements
to any Individual Property that may result in such special or other assessments.
.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 thereunder, render the Loan Documents unenforceable,
and Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.
.1.19 NO PRIOR ASSIGNMENT. There are no prior assignments of the Leases or
any portion of the Rents due and payable or to become due and payable which are
presently outstanding.
.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. 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.
42
.1.21 USE OF PROPERTY. Each Individual Property is used exclusively for
self-service storage facility purposes and other appurtenant and related uses.
.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. All certifications, permits,
licenses and approvals, including without limitation, certificates of completion
and occupancy permits required for the legal use, occupancy and operation of
each Individual Property as currently operated (collectively, the "LICENSES"),
have been obtained and are in full force and effect. Borrower shall keep and
maintain all licenses necessary for the operation of each Individual Property as
currently operated. The use being made of each Individual Property is in
conformity with the certificate of occupancy issued for such Individual
Property.
.1.23 FLOOD ZONE. Except as shown on the Surveys, none of the Improvements
on any Individual Property are located in an area as identified by the Federal
Emergency Management Agency as an area having special flood hazards and, if so
located, the flood insurance required hereunder is in full force and effect with
respect to each such Individual Property.
.1.24 PHYSICAL CONDITION. Each Individual 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 any Individual Property, whether latent
or otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in any Individual 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. Each
Individual Property is free from damage covered by fire or other casualty. All
liquid and solid waste disposal, septic and sewer systems located on each
Individual Property are in a good and safe condition and repair and in
compliance with all Legal Requirements.
.1.25 BOUNDARIES. Except as otherwise as shown on the Survey, all of the
Improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries and building restriction
lines of such Individual Property, and no improvements on adjoining properties
encroach upon such Individual Property, and no easements or other encumbrances
upon the applicable Individual Property encroach upon any of the Improvements,
so as to affect the value or marketability of the applicable Individual Property
except those which are insured against by title insurance; provided, however, to
the extent that any of the foregoing are not satisfied, such encroachments do
not have a Material Adverse Effect.
.1.26 LEASES.
(a) The Properties are not subject to any Leases other than the Leases
disclosed to Lender in writing or set forth in the occupancy and/or rental
reports delivered to Lender on or prior to the Closing Date. Except as set forth
on Schedule 4.1.26 attached hereto, there are no Major Leases on any Individual
Property. Borrower is the owner and lessor of landlord's interest in the Leases.
No Person has any possessory interest in any Individual Property or right to
43
occupy the same except under and pursuant to the provisions of the Leases. The
current Leases are in full force and effect and there are no defaults by
Borrower or, to the best of Borrower's knowledge, any tenant under any Lease
which have a Material Adverse Effect and, to the best of Borrower's knowledge,
there are no conditions that, with the passage of time or the giving of notice,
or both, would constitute defaults under any Lease which would have a Material
Adverse Effect. Except as disclosed to Lender in writing or set forth in the
Rent Rolls delivered to Lender on or prior to the Closing Date, no Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date. There are no offsets or defenses to the payment of any portion
of the Rents. All work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable tenant, and,
except as disclosed to Lender in writing or set forth in the Rent Rolls, any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any tenant has
already been received by such tenant. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is still in effect. Except as disclosed to Lender in writing or
set forth in the Rent Rolls, to the best of Borrower's knowledge, no tenant 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. No tenant under any Lease has any right or option
for additional space in the Improvements. To Borrower's knowledge, 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.
(b) With respect to any Individual Property located within the State of New
York, Lender shall have all of the rights against lessees of each Individual
Property located in the State of New York set forth in Section 291-f of the Real
Property Law of New York.
.1.27 SURVEY. The Survey for each Individual 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 such Individual Property or the title thereto.
.1.28 LOAN TO VALUE. The maximum principal amount of the Loan does not
exceed one hundred twenty-five percent (125%) of the fair market value of the
Properties.
.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Properties to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Security
44
Instrument, been paid, and, under current Legal Requirements, each Security
Instrument is enforceable in accordance with their respective terms by Lender
(or any subsequent holder thereof).
.1.30 SINGLE PURPOSE ENTITY/SEPARATENESS. Borrower represents, warrants and
covenants as follows:
(a) The purpose for which Borrower is organized is and shall be
limited solely to (i) owning, holding, selling, leasing, transferring,
exchanging, operating and managing the Properties, (ii) entering into this
Agreement with Lender, (iii) refinancing the Properties in connection with
a permitted repayment of the Loan and (iv) transacting any and all lawful
business for which a Borrower may be organized under its constitutive law
that is incident, necessary and appropriate to accomplish the foregoing.
(b) Borrower does not own and will not own any asset or property other
than (i) the Properties, and (ii) incidental personal property necessary
for and used or to be used in connection with the ownership or operation of
the Properties.
(c) Borrower will not engage in any business other than the ownership,
management and operation of the Properties.
(d) Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower, any guarantors of
the obligations of Borrower or any Affiliate of any constituent party,
owner or guarantor (collectively, the "RELATED PARTIES"), except upon terms
and conditions that are intrinsically fair, commercially reasonable and
substantially similar to those that would be available on an arms-length
basis with third parties not so affiliated with Borrower or such Related
Parties. Borrower will maintain an arm's length relationship with such
Related Parties or any other Person.
(e) Borrower has not incurred and will not incur any Indebtedness
other than (i) the Loan and (ii) trade payables in the ordinary course of
business with trade creditors in amounts as are normal and reasonable under
the circumstances, provided such debt is not evidenced by a note, does not
exceed $3,500,000.00 in the aggregate, and is not in excess of sixty (60)
days past due. No Indebtedness other than the Debt may be secured (senior,
subordinate or pari passu) by the Properties.
(f) Borrower has not made and will not make any loans or advances to
any Person and shall not acquire obligations or securities of any Related
Party. Borrower will not form, acquire or hold any subsidiaries, or own or
acquire any stock or equity interest in any Related Parties or any other
Person (except that Borrower may invest in those investments permitted
under the Loan Documents).
(g) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its own assets only, and as the same shall become
due.
45
(h) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence,
and Borrower will not, nor will Borrower permit any Related Party to,
amend, modify or otherwise change the partnership certificate, partnership
agreement, articles of incorporation and bylaws, operating agreement, trust
or other organizational documents of Borrower or such Related Party without
the prior written consent of Lender.
(i) Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of any other Person and
Borrower's assets will not be listed as assets on the financial statement
of any other Person except as otherwise required in accordance with GAAP.
Borrower will file its own tax returns to the extent required by applicable
law; provided, however, that Borrower's assets and income may be included
in a consolidated tax return of its parent companies if inclusion on such a
consolidated tax return is required to comply with the requirements of
applicable law or by reason of Borrower's being treated as a disregarded
entity for Federal income tax purposes.
(j) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other Person
(including any Affiliate or other Related Party), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other and shall maintain and
utilize separate stationery, invoices and checks.
(k) Borrower will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business operations, except that no constituent party
of Borrower shall be required to make any additional capital contributions
to Borrower.
(l) Neither Borrower nor any Related Party will seek the dissolution,
winding up, liquidation, consolidation or merger in whole or in part, or
the sale of material assets of Borrower.
(m) Borrower will not commingle its assets with those of any other
Person and will hold all of its assets in its own name. Borrower will
deposit all of its funds in checking accounts, savings accounts, time
deposits or certificate deposits in its own name or invest such funds in
its own name.
(n) Borrower will not guarantee or become obligated for the debts of
any other Person and does not and will not hold itself out as being
responsible for the debts or obligations of any other Person.
(o) Unless Borrower is a single member limited liability company
formed under the laws of the State of Delaware, Borrower shall require that
a Person holding an interest in Borrower be a corporation or limited
liability company (the "SPC PARTY") which will at all times comply, and
will cause Borrower to comply, with each of the representations,
warranties, and covenants contained in this Section 4.1.30 as if such
46
representation, warranty or covenant was made directly by such Person. The
structure of Borrower and the interest of the SPC Party shall be reasonably
acceptable to Lender and shall satisfy the requirements of the Rating
Agencies for "single purpose, bankruptcy remote entities". Notwithstanding
the foregoing so long as Borrower is a single member limited liability
company formed under the laws of the State of Delaware and the
organizational documents of Borrower as delivered to Lender in connection
with the Closing are not modified, Borrower shall not be required to have
an SPC Party and all provisions of this Agreement and the other Loan
Documents pertaining to SPC Party shall be disregarded.
(p) Borrower shall at all times cause there to be at least one (1)
duly appointed members of the board of directors of the SPC Party or if
Borrower is a single member Delaware limited liability company, its board
of managers (an "INDEPENDENT DIRECTOR") reasonably satisfactory to Lender
who shall not have been at the time of each such individual's respective
appointment, and shall not be at any time while serving as a Independent
Director and may not have been at any time during the preceding five years
(i) a shareholder of, or an officer, director, partner or employee of,
Borrower or any of its or their shareholders, subsidiaries or Affiliates,
(ii) a customer of, or supplier to, or who derives any of its purchases or
revenues from its activities with Borrower or SPC Party (if applicable) or
any Affiliate of either of them any of its or their shareholders,
subsidiaries or Affiliates, (iii) a Person controlling or under common
control with any such shareholder, partner supplier or customer, or (iv) a
member of the immediate family of any such shareholder, officer, director,
partner, employee, supplier or customer of any other director of Borrower
or the SPC Party (if applicable). Notwithstanding the foregoing, an
individual that otherwise satisfies the foregoing shall not be disqualified
from serving as an Independent Director if such individual is at the time
of initial appointment, or at any time while serving as an Independent
Director, an independent director of a "special purpose entity" affiliated
with Borrower. As used in this clause (p), the term "special purpose
entity" shall mean an entity whose organizational documents contain
restrictions on its activities and impose requirements intended to preserve
separateness that are substantially similar to those of Borrower and
provide, inter alia, that it: (a) is organized for a limited purpose; (b)
has restrictions on its ability to incur indebtedness, dissolve, liquidate,
consolidate, merge and/or sell assets; (c) may not file voluntarily a
bankruptcy petition without the consent of independent managers or
independent directors and (d) shall conduct itself in accordance with
certain "separateness covenants", including, but not limited to, the
maintenance of its books, records, bank accounts and assets separate from
those of any other Person.
(q) Borrower shall not cause or permit the board of directors of the
SPC Party to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any
common stock, requires a vote of the board of directors of the SPC Party of
Borrower unless at the time of such action there shall be at least one
member who is an Independent Director.
(r) Borrower shall allocate fairly and reasonably any overhead
expenses that are shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate or Related
Party.
47
(s) Borrower shall not pledge its assets for the benefit of any other
Person other than with respect to the Loan.
(t) Borrower shall maintain a sufficient number of employees in light
of its contemplated business operations and pay the salaries of its own
employees from its own funds.
(u) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion, a true copy of which is
attached as Schedule 4.1.30 attached hereto, shall be and remain true and
correct in all respects.
.1.31 MANAGEMENT AGREEMENT. The Management Agreement is in full force and
effect and 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. Except with respect to the Properties set forth
on Schedule 4.1.31 attached hereto, the Properties are managed and operated as
"U-Store-It" self-service storage facilities.
.1.32 ILLEGAL ACTIVITY. No portion of any Individual Property has been or
will be purchased with proceeds of any illegal activity and to the best of
Borrower's knowledge, there are no illegal activities or activities relating to
any controlled substances at any Individual Property.
.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. 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 Properties or the business operations or the financial
condition of Borrower. Borrower has disclosed to Lender all material facts and
has not failed to disclose any material fact that could cause any Provided
Information or representation or warranty made herein to be materially
misleading.
.1.34 INTELLECTUAL PROPERTY.
Borrower owns or has the right to use, under valid license agreements
or otherwise, all Intellectual Property necessary to or used in the conduct of
its businesses as now conducted and as contemplated by this Agreement or the
other Loan Documents, without known conflict with any patent, license,
franchise, trademark, trade secret, trade name, copyright, or other proprietary
right of any other Person, provided, however, Borrower may not be able to use
the "U-Store-It" name with respect to the Properties set forth on Schedule
4.1.31 attached hereto. All such Intellectual Property is fully protected and/or
duly and properly registered, filed or issued in the appropriate office and
jurisdictions for such registrations, filings or issuances. No material claim
has been asserted by any Person with respect to the use of any Intellectual
Property, or challenging or questioning the validity or effectiveness of any
Intellectual Property. The use of such Intellectual Property by Borrower does
not infringe on the rights of any Person,
48
subject to such claims and infringements as do not, in the aggregate, give rise
to any liabilities on the part of Borrower that could reasonably be expected to
have a Material Adverse Effect.
.1.35 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.
.1.36 PRINCIPAL PLACE OF BUSINESS; STATE OF ORGANIZATION.
Borrower's principal place of business as of the date hereof is the
address set forth in the introductory paragraph of this Agreement. Borrower is
organized under the laws of the State of Delaware and its organizational
identification number is 3993827.
.1.37 BUSINESS PURPOSES.
The Loan is solely for the business purpose of Borrower, and is not
for personal, family, household, or agricultural purposes.
.1.38 TAXES.
Borrower has filed all Federal, State, county, municipal, and city
income and other tax returns required to have been filed by it and has paid all
taxes and related liabilities which have become due pursuant to such returns or
pursuant to any assessments received by it. Borrower knows of no basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
.1.39 FORFEITURE.
Neither Borrower nor, to Borrower's actual knowledge, any other Person
in occupancy of or involved with the operation or use any of the Properties has
committed any act or omission affording the Federal government or any State or
local government the right of forfeiture as against any of the Properties or any
part thereof or any monies paid in performance of Borrower's obligations under
the Note, this Agreement or the other Loan Documents. Borrower hereby covenants
and agrees not to commit, permit or suffer to exist any act or omission
affording such right of forfeiture.
.1.40 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants, except as disclosed in the written
reports resulting from the environmental site assessments of the Properties
delivered to and approved by Lender prior to the Closing Date (the
"ENVIRONMENTAL REPORT") and to the best of Borrower's knowledge: (a) there are
no Hazardous Substances or underground storage tanks in, on, or under any of the
Properties, except those that are both (i) in compliance with current
Environmental
49
Laws and with permits issued pursuant thereto (if such permits are required),
and (ii) in amounts not in excess of that necessary to operate, clean, repair
and maintain the applicable Individual Property or each tenant's respective
business at such Individual Property as set forth in their respective Leases;
(b) there are no past, present or threatened Releases of Hazardous Substances in
violation of any Environmental Law in, on, under or from any of the Properties
and which would require remediation by a Governmental Authority; (c) there is no
threat of any Release of Hazardous Substances migrating to any of the Properties
which would require remediation by a Governmental Authority; (d) there is no
past or present non-compliance with current Environmental Laws, or with permits
issued pursuant thereto, in connection with any of the Properties except as
described in the Environmental Reports; (e) Borrower does not know of, and has
not received, any written or oral notice or other communication from any Person
(including but not limited to a Governmental Authority) relating to Hazardous
Substances in, on, under or from any of the Properties; and (f) Borrower has
truthfully and fully provided to Lender, in writing, any and all information
relating to environmental conditions in, on, under or from any of the Properties
known to Borrower or contained in Borrower's files and records, including but
not limited to any reports relating to Hazardous Substances in, on, under or
migrating to or from any of the Properties and/or to the environmental condition
of the Properties.
.1.41 TAXPAYER IDENTIFICATION NUMBER.
Borrower's United States taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
.1.42 OFAC.
Borrower represents and warrants that none of Borrower or any
Guarantor or any of their respective Affiliates is a Prohibited Person, and
Borrower and each Guarantor and their respective Affiliates are in full
compliance with all applicable orders, rules, regulations and recommendations of
The Office of Foreign Assets Control of the U.S. Department of the Treasury.
.1.43 INTENTIONALLY DELETED.
.1.44 EMBARGOED PERSON.
As of the date hereof and at all times throughout the term of the
Loan, including after giving effect to any transfers permitted pursuant to the
Loan Documents, (a) none of the funds or other assets of Borrower, SPC Party or
any Guarantor constitutes property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. Sections 1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Borrower, SPC
Party or any Guarantor (whether directly or indirectly), is prohibited by law or
the Loan made by the Lender is in violation of law ("EMBARGOED PERSON"); (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower, SPC
Party or any Guarantor with the result that the investment in Borrower, SPC
Party or any Guarantor (whether directly or indirectly), is prohibited by law or
the Loan is in violation of law; and (c) none of the funds of Borrower, SPC
Party or any Guarantor (whether directly or indirectly), has
50
been derived from any unlawful activity with the result that the investment in
Borrower, SPC Party or any Guarantor (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
SECTION .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.
BORROWER COVENANTS
SECTION .1 AFFIRMATIVE COVENANTS.
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (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:
.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
(a) Borrower shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence, rights, licenses, permits
and franchises, and comply, in all material respects, with all Legal
Requirements applicable to it and the Properties. There shall never be committed
by Borrower, nor shall Borrower suffer or permit any other Person in occupancy
of or involved with the operation or use of the Properties to do, any act or
omission affording the Federal government or any State or local government the
right of forfeiture as against any Individual Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents. Borrower hereby covenants and agrees not to commit, permit or suffer
to exist any act or omission affording such right of forfeiture. Borrower shall,
at all times, maintain, preserve and protect all franchises and trade names and
preserve all the remainder of its property used or useful in the conduct of its
business and shall keep the Properties 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 this Agreement and the Security Instruments. Borrower shall keep the
Properties 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
any Individual Property that is the subject of any O&M Program in accordance
with the terms and provisions thereof in all material respects.
(b) After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding promptly initiated and conducted in good
faith and with due
51
diligence, the validity of any Legal Requirement, the applicability of any Legal
Requirement to Borrower or any Individual Property or any alleged violation of
any Legal Requirement, provided that (i) no Default or Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable laws; (iii) no
Individual 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 comply with any such Legal Requirement
determined to be valid or applicable or cure any violation of any Legal
Requirement; (v) such proceeding shall suspend the enforcement of the contested
Legal Requirement against Borrower or any Individual Property; and (vi) 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 or part thereof, as necessary to cause compliance with
such Legal Requirement at any time when, in the judgment of Lender, the
validity, applicability or violation of such Legal Requirement is finally
established or any Individual Property (or any part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost.
.1.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Properties or
any part thereof as the same become due and payable; provided, however,
Borrower's obligation to directly pay Taxes and comply with the following
sentence shall be suspended for so long as Borrower complies with the terms and
provisions of Section 7.2 hereof. Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10) days
prior to the date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Borrower shall 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 Properties, and shall promptly pay for all utility
services provided to the Properties. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any Taxes or Other
Charges, provided that (i) no Default or Event of Default has occurred and
remains uncured; (ii) 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) no Individual 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 applicable
Individual Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or as may be requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the
judgment of Lender, the entitlement of such claimant is established or any
Individual Property (or part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated,
52
cancelled or lost or there shall be any danger of the Lien of any Security
Instrument being primed by any related Lien.
.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 any Individual Property.
.1.4 ACCESS TO PROPERTIES. Borrower shall permit agents, representatives
and employees of Lender to inspect the Properties or any part thereof at
reasonable hours upon reasonable advance notice.
.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender of any
Material Adverse Effect on Borrower's condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.
.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 adversely 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.
.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. Borrower shall execute
and deliver the Cash Management Agreement within fifteen (15) Business Days of
the Closing Date.
.1.8 AWARDS OR INSURANCE BENEFITS. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with any Individual Property, and Lender
shall be reimbursed for any expenses incurred in connection therewith (including
attorneys' fees and disbursements, and the payment by Borrower of the expense of
an appraisal on behalf of Lender in case of a Casualty or Condemnation affecting
any Individual Property or any part thereof) out of such Award or Insurance
Proceeds.
.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, including, without
53
limitation, the authorization of Lender to execute and/or the execution by
Borrower of UCC financing statements; and
(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.
.1.10 SUPPLEMENTAL SECURITY INSTRUMENT AFFIDAVITS. As of the date hereof,
Borrower represents that it has paid all State, county and municipal recording
and all other taxes imposed upon the execution and recordation of the Security
Instruments. If at any time Lender determines, based on applicable law, that
Lender is not being afforded the maximum amount of security available from any
one or more of the Properties as a direct or indirect result of applicable taxes
not having been paid with respect to any Individual Property, Borrower agrees
that Borrower will execute, acknowledge and deliver to Lender, immediately upon
Lender's request, supplemental affidavits increasing the amount of the Debt
attributable to any such Individual Property (as set forth as the Release Amount
on Schedule I attached hereto) for which all applicable taxes have been paid to
an amount determined by Lender to be equal to the lesser of (a) the greater of
the fair market value of the applicable Individual Property (i) as of the date
hereof and (ii) as of the date such supplemental affidavits are to be delivered
to Lender, and (b) the amount of the Debt attributable to any such Individual
Property (as set forth as the Release Amount on Schedule I attached hereto), and
Borrower shall, on demand, pay any additional taxes.
.1.11 FINANCIAL REPORTING.
(a) Borrower will keep and maintain or will cause to be kept and maintained
on a Fiscal Year basis, in accordance with GAAP (or such other accounting basis
acceptable to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and all items of income and
expense in connection with the operation on an individual basis of the
Properties. 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 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 Properties, as Lender shall 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, a complete copy of Borrower's
annual financial statements audited by an Acceptable Accountant in accordance
with GAAP (or such other accounting basis acceptable to Lender) covering the
Properties on a combined basis as well as each Individual Property for such
Fiscal Year and containing statements of profit and loss for Borrower and the
Properties and a balance sheet for Borrower. Such statements shall set forth the
financial condition and the results of operations for the Properties 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
54
and expenses for the prior Fiscal Year; (ii) an Officer's Certificate stating
that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower and the Properties being
reported upon and has been prepared in accordance with GAAP; (iii) an
unqualified opinion of an Acceptable Accountant; (iv) a list of tenants under
Major Leases; (v) a breakdown showing the year in which each Major Lease then in
effect expires and the percentage of total floor area of the Improvements and
the percentage of base rent with respect to which Major Leases shall expire in
each such year, each such percentage to be expressed on both a per year and
cumulative basis; (vi) if requested by Lender, an annual occupancy report for
such year; and (vii) a schedule audited by such Acceptable 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 Acceptable Accountant. Together
with Borrower's annual financial statements, Borrower shall furnish to Lender an
Officer's Certificate certifying as of the date thereof whether there exists an
event or circumstance which constitutes a Default or Event of Default under the
Loan Documents executed and delivered by, or applicable to, Borrower, and if
such Default or Event of Default exists, the nature thereof, the period of time
it has existed and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender on or before
twenty (20) days after the end of each calendar month the following items,
accompanied by an Officer's Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Properties on a combined basis as
well as each Individual Property (subject to normal year-end adjustments) as
applicable: (i) a rent roll or other record of leasing for the subject month
accompanied by an Officer's Certificate with respect thereto; (ii) monthly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar month, noting Net Operating Income, Gross Income from Operations,
and Operating Expenses (not including any contributions to the Replacement
Reserve Fund), and other information necessary and sufficient to fairly
represent the financial position and results of operation of the Properties
during such calendar month (on a combined basis as well as each Individual
Property), and containing a comparison of budgeted income and expenses and the
actual income and expenses; (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. In addition, such
certificate shall also state that the representations and warranties of Borrower
set forth in Section 4.1.30 are true and correct as of the date of such
certificate and that there are no trade payables outstanding for more than sixty
(60) days.
(d) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget not
later than sixty (60) days prior to the commencement of such period or Fiscal
Year in form reasonably satisfactory to Lender.
(e) Intentionally Deleted.
(f) 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
55
to the operation of any Individual Property and the financial affairs of
Borrower as may be reasonably requested by Lender.
(g) 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 in electronic form and prepared using a
Microsoft Word for Windows or Microsoft Excel for Windows program.
(h) Borrower agrees that Lender may forward to each purchaser, transferee,
assignee, servicer, participant, or investor in all or any portion of the Loan
or any Securities or any Rating Agency rating such participations and/or
Securities and each prospective investor, and any organization maintaining
databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire relating
to the Debt and to Borrower, any Guarantor and the Properties, whether furnished
by Borrower, any Guarantor or otherwise, as Lender determines necessary or
desirable. Borrower irrevocably waives any and all rights it may have under any
applicable laws to prohibit such disclosure, including, but not limited, to any
right of privacy.
.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 Properties.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Properties.
.1.13 TITLE TO THE PROPERTIES. Borrower will warrant and defend (a) the
title to each Individual 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 Security Instruments and the Assignments of Leases
on the Properties, 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 any Individual Property, other than as permitted
hereunder, is claimed by another Person.
.1.14 COSTS OF ENFORCEMENT. In the event (a) that any Security Instrument
encumbering any Individual Property is foreclosed in whole or in part or that
any such Security Instrument 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 any Security Instrument encumbering any Individual
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 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.
.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
56
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 Security Instruments 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) After request by Lender, Borrower shall use its commercially reasonable
efforts to deliver to Lender, tenant estoppel certificates from each commercial
tenant leasing space at the Properties pursuant to a Major Lease in form and
substance reasonably satisfactory to Lender provided that Borrower shall not be
required to deliver such certificates more frequently than two (2) times in any
calendar year.
.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the Loan received
by it on the Closing Date only for the purposes set forth in Section 2.1.4
hereof.
.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.
.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 in all
relevant jurisdictions, and (b) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower and SPC Party as of the date of the Securitization.
.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or initiate
the joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual 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 Individual
Property.
.1.20 LEASING MATTERS.
(a) Except as otherwise consented to by Lender in writing, all Leases shall
be written on the standard form of lease which shall have been approved by
Lender. Upon reasonable request (not to be made more than once in any
consecutive twelve (12) month period), Borrower shall furnish Lender with
executed copies of a sample of the Leases as requested by Lender. No material
changes may be made to the Lender-approved standard form of lease without the
prior written consent of Lender. In addition, all renewals of Leases and all
proposed leases shall provide for rental rates and terms comparable to existing
local market rates and terms and shall be arm's-length transactions with bona
fide, independent third party tenants. All Major Leases
57
shall provide that they are subordinate to the applicable Security Instrument
and that the tenant agrees to attorn to Lender.
(b) Borrower (i) shall observe and perform all the obligations imposed upon
the landlord under the Leases and shall not do or permit to be done anything to
impair the value of the Leases as security for the Debt; (ii) shall enforce all
of the terms, covenants and conditions contained in the Leases upon the part of
the tenant thereunder to be observed or performed (except for termination of a
Major Lease which shall require Lender's prior written approval); (iii) shall
not collect any of the Rents more than two (2) months in advance (other than
security deposits); (iv) shall not execute any other assignment of the
landlord's interest in the Leases or the Rents; and (v) shall not consent to any
assignment of or subletting under the Leases not in accordance with their terms,
without the prior written consent of Lender.
(c) All proposed Leases, renewals of Leases or amendments or terminations
of Leases shall be subject to the prior approval of Lender, which approval shall
not be unreasonably withheld, conditioned or delayed; provided, however,
Borrower may, without the consent of Lender, terminate any Lease (other than a
Major Lease) if the tenant thereunder is in default beyond applicable notice and
grace periods under such Lease. Notwithstanding the provisions of the preceding
sentence, renewals of Leases and proposed Leases shall not be subject to the
prior approval of Lender, provided all of the following conditions are
satisfied: (i) the Lease is not a Major Lease; (ii) the term is on a
month-to-month basis; (iii) the renewal or proposed Lease is on the standard
form of lease approved by Lender and provides for a term of less than one (1)
year; (iv) the renewal or proposed Lease does not contain any option, offer,
right of first refusal, or other similar right to acquire all or any portion of
the applicable Individual Property; and (v) the renewal or proposed Lease
provides for rental rates and terms (including credits or concessions)
comparable to existing market rates and terms and is an arm's-length transaction
with a bona fide, independent third party tenant. Upon Lender's reasonable
request, Borrower shall deliver to Lender, (i) within thirty (30) days after the
execution of any renewal or proposed Major Lease, copies of all such Major
Leases, and (ii) within thirty days of such request, Borrower's certification
that it has satisfied all of the conditions of this Section 5.1.20(c) with
respect to all renewal or new Leases (which are not Major Leases) which were
entered into pursuant to this Section 5.1.20(c) since the date of Lender's last
request.
.1.21 ALTERATIONS. Borrower shall obtain Lender's prior written consent to
any alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a Material
Adverse Effect. Notwithstanding the foregoing, Lender's consent shall not be
required in connection with any alterations that will not have a Material
Adverse Effect, provided that such alterations are made in connection with (a)
tenant improvement work performed pursuant to the terms of any Lease executed on
or before the date hereof, (b) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, or (c) alterations performed in connection with the restoration of
an Individual Property after the occurrence of a casualty in accordance with the
terms and provisions of this Agreement. If the total unpaid amounts with respect
to alterations to the Improvements at any Individual Property (other than such
amounts to be paid or reimbursed by tenants under the Leases), together with any
other alterations undertaken at the
58
same time at any of the other Properties, shall at any time exceed Four Million
and 00/100 Dollars ($4,000,000.00) (the "THRESHOLD AMOUNT"), Borrower shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for Borrower's obligations under the Loan Documents any of
the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and that the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization, or (D) a completion bond or
letter of credit issued by a financial institution having a rating by S&P of not
less than A-1+ if the term of such bond or letter of credit is no longer than
three (3) months or, if such term is in excess of three (3) months, issued by a
financial institution having a rating that is acceptable to Lender and that the
applicable Rating Agencies have confirmed in writing will not, in and of itself,
result in a downgrade, withdrawal or qualification of the initial, or, if
higher, then current ratings assigned 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 applicable
Individual Property (other than such amounts to be paid or reimbursed by tenants
under the Leases), together with any other alterations undertaken at the same
time at any of the other Properties over the Threshold Amount and applied from
time to time at the option of Lender to pay for such alterations or to terminate
any of the alterations and restore the applicable Properties to the extent
necessary to prevent any Material Adverse Effect.
.1.22 ENVIRONMENTAL COVENANTS.
(a) Borrower covenants and agrees that so long as the Loan is outstanding
(i) all uses and operations on or of the Properties, whether by Borrower or any
other Person, shall be in compliance in all material respects with all
Environmental Laws and permits issued pursuant thereto; (ii) Borrower shall not
cause or permit any Releases of Hazardous Substances in, on, under or from any
of the Properties; (iii) there shall be no Hazardous Substances in, on, or under
any of the Properties, except those that are both (A) in compliance with all
Environmental Laws and with permits issued pursuant thereto, if and to the
extent required, and (B) (1) in amounts not in excess of that necessary to
operate the applicable Individual Property or (2) fully disclosed to and
approved by Lender in writing; (iv) Borrower shall keep the Properties free and
clear of all liens and other encumbrances imposed pursuant to any Environmental
Law, whether due to any act or omission of Borrower or any other Person (the
"ENVIRONMENTAL LIENS"); (v) Borrower shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to paragraph (b) below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (vi) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with any of the
Properties, pursuant to any reasonable written request of Lender, upon Lender's
reasonable belief that an Individual Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results thereof,
and Lender and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof; (vii) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (A) reasonably
effectuate remediation of any Hazardous Substances in, on, under or from any
Individual Property to the extent required by Environmental Laws; and (B) comply
with any Environmental Law; (viii) Borrower shall not allow any tenant or other
user of any of the Properties to violate any Environmental Law; and (ix)
Borrower shall immediately notify Lender in writing after it has become aware
of: (A) any presence or Release or threatened
59
Releases of Hazardous Substances in, on, under, from or migrating towards any of
the Properties if it would reasonably be expected to result in a Material
Adverse Effect; (B) any non compliance with any Environmental Laws related in
any way to any of the Properties if it would reasonably be expected to result in
a Material Adverse Effect; (C) any actual or potential Environmental Lien; (D)
any required or proposed remediation of environmental conditions relating to any
of the Properties; and (E) any written or oral notice or other communication of
which Borrower becomes aware from any source whatsoever (including but not
limited to a Governmental Authority) relating in any way to Hazardous
Substances.
(b) Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon any Individual
Property at all reasonable times upon reasonable notice to Borrower to assess
any and all aspects of the environmental condition of any Individual Property
and its use, including but not limited to conducting any environmental
assessment or audit (the scope and need of which shall be determined in Lender's
reasonable discretion based upon its good-faith belief that any Individual
Property is not in full compliance with all Environmental Laws) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing reasonably necessary to assess the
environmental condition of such Individual Property. Borrower shall cooperate
with and provide access to Lender and any such Person or entity designated by
Lender and Lender shall take reasonable steps to minimize any disruption to
Borrower's use and operation of such Individual Property.
.1.23 OFAC.
At all times throughout the term of the Loan, Borrower, each Guarantor
and their respective Affiliates shall be in full compliance with all applicable
orders, rules, regulations and recommendations of The Office of Foreign Assets
Control of the U.S. Department of the Treasury.
.1.24 O&M PROGRAM.
Borrower covenants and agrees to implement and follow the terms and
conditions of the O&M Program for each applicable Property during the term of
the Loan, including any extension or renewal thereof. Lender's requirement that
Borrower comply with the O&M Program shall not be deemed to constitute a waiver
or modification of any of Borrower's covenants and agreements with respect to
Hazardous Substances or Environmental Laws.
SECTION .2 NEGATIVE COVENANTS.
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Security Instruments encumbering the Properties (and all related
obligations) 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:
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.2.1 OPERATION OF PROPERTY. Borrower shall not, without the prior consent
of Lender (which consent shall not be unreasonably withheld), amend, modify,
cancel or terminate the Management Agreement or otherwise replace the Manager or
enter into any other management agreement with respect to any Individual
Property.
.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 any
Individual Property or permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan Documents; and
(iii) Liens for Taxes or Other Charges not yet due.
.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 Properties, (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) except as expressly permitted under the Loan Documents, modify,
amend, waive or terminate its organizational documents or its qualification and
good standing in any jurisdiction or (e) cause the SPC Party to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result
of which the SPC Party would be dissolved, wound up or liquidated in whole or in
part, or (ii) except as expressly permitted under the Loan Documents, amend,
modify, waive or terminate the certificate of incorporation, bylaws or similar
organizational documents of the SPC Party, in each case, without obtaining the
prior written consent of Lender or Lender's designee.
.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any line of business
other than the ownership, acquisition, development, operation, leasing and
management of the Properties (including providing services in connection
therewith), 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.
.2.5 DEBT CANCELLATION. Borrower shall not cancel or otherwise forgive or
release any material 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.
.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 Affiliates of
Borrower except in the ordinary course of business and on terms which are no
less favorable to Borrower or such Affiliate than would be obtained in a
comparable arm's-length transaction with an unrelated third party.
.2.7 ZONING. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance
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or use or permit the use of any portion of any Individual 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.
.2.8 ASSETS. Borrower shall not purchase or own any property other than the
Properties.
.2.9 DEBT. Borrower shall not create, incur or assume any Indebtedness
other than the Debt except to the extent expressly permitted hereby.
.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or initiate
the joint assessment of any Individual Property with (a) any other real property
constituting a tax lot separate from such Individual Property, or (b) any
portion of such Individual 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 Individual Property.
.2.11 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its principal
place of business set forth on the first page of this Agreement without first
giving Lender thirty (30) days prior written notice.
.2.12 ERISA. (a) During the term of the Loan or of any obligation or right
hereunder, Borrower shall not be a Plan and none of the assets of Borrower shall
constitute Plan Assets.
(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, and represents and
covenants that (A) Borrower is not and does not maintain an "employee benefit
plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a "governmental plan" within the meaning of Section 3(32) of ERISA; (B)
Borrower is not subject to 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).
.2.13 TRANSFERS. (a) Except as otherwise permitted by the provisions of
this Section 5.2.13 or except to the extent permitted elsewhere in the Loan
Documents, Borrower will not (i) permit or suffer (by operation of law or
otherwise) any sale, assignment, conveyance, transfer or other disposition of
legal or equitable interest in all or any part of any Individual Property, (ii)
permit or suffer (by operation of law or otherwise) any sale, assignment,
conveyance, transfer
62
or other disposition of any direct or indirect interest in Borrower, (iii)
permit or suffer (by operation of law or otherwise) any mortgage, lien or other
encumbrance of all or any part of any Individual Property, (iv) permit or suffer
(by operation of law or otherwise) any pledge, hypothecation, creation of a
security interest in or other encumbrance of any direct or indirect interests in
Borrower, or (v) file a declaration of condominium with respect to any
Individual Property.
(b) A sale or conveyance by Borrower of any Individual Property (but not a
mortgage, lien or other encumbrance) is permitted provided that each of the
following conditions have been satisfied:
(i) no Event of Default shall have occurred and be continuing;
(ii) the Person to whom such Individual Property is sold or
conveyed satisfies the requirements of a Special Purpose Entity and
not less than 50% of the direct or indirect interests are owned and
controlled by a Permitted Owner;
(iii) Lender has received a non-consolidation opinion which may
be relied upon by Lender, the Rating Agencies and their respective
counsel, successors and assigns, with respect to the sale or
conveyance, which opinion shall be reasonably acceptable to Lender
and, after a Securitization, the Rating Agencies;
(iv) if a Securitization has occurred, Borrower shall deliver
confirmation in writing from the applicable Rating Agencies to the
effect that such transfer or sale will not result in a downgrading,
withdrawal or qualification of the respective ratings in effect
immediately prior to such transfer or sale for the Securities issued
in connection with the Securitization which are then outstanding;
(v) the transferee of such Individual Property shall execute an
assumption of all of the obligations of the Borrower under the Loan
Agreement, the applicable Security Instrument and the other Loan
Documents, subject, however, to the provisions of Section 9.4 of this
Agreement and the proposed replacement guarantor shall assume all of
the obligations of Guarantor under the Guaranty, in a manner
satisfactory to Lender in all respects, including, without limitation,
by entering into an assumption agreement in form and substance
satisfactory to Lender, and, in each case, delivering such legal
opinions as Lender may reasonably require;
(vi) Borrower shall give written notice to Lender of the proposed
sale or conveyance not later than fifteen (15) days prior thereto,
which notice shall set forth the name of the proposed transferee,
identify the owners of such direct and indirect interests of the
proposed transferee and set forth the date the sale or conveyance is
expected to be effective.
(c) A transfer or sale (but not a pledge, hypothecation, creation of a
security interest in or other encumbrance) of an indirect ownership interest in
Borrower (other than those
63
expressly permitted pursuant to Section 5.2.13(d) hereof) is permitted provided
the following conditions have been satisfied:
(i) such transfer or sale is to a Permitted Owner;
(ii) prior to any such transfer or sale of direct or indirect
ownership interests in Borrower, as a result of which (and after
giving effect to such transfer or sale), more than 49% of the direct
or indirect ownership interests in Borrower shall have been
transferred to a Person or entity not owning at least 49% of the
direct or indirect ownership interests in Borrower on the date of
closing, Borrower shall deliver to Lender a non-consolidation opinion
which may be relied upon by Lender, the Rating Agencies and their
respective counsel, successors and assigns, with respect to the
proposed transfer or sale, which opinion shall be reasonably
acceptable to Lender and, after a Securitization, the Rating Agencies;
(iii) immediately prior to such transfer or sale no Event of
Default has occurred and is continuing;
(iv) Borrower shall deliver confirmation in writing from the
applicable Rating Agencies to the effect that such transfer or sale
will not result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to such transfer or
sale for the Securities issued in connection with the Securitization
which are then outstanding; and
(v) Borrower shall give or cause to be given written notice to
Lender of the proposed transfer or sale not later than fifteen (15)
days prior thereto, which notice shall set forth the name of the
Person to which the interest in Borrower is to be transferred or sold,
identify the proposed transferee and set forth the date the transfer
or sale is expected to be effective.
(d) Notwithstanding the provisions of Sections 5.2.13(a) and (c) hereof,
the following transfers or sales shall not be deemed to be a transfer or sale in
violation of the provisions of this Section 5.2.13: (i) a transfer by devise or
descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party or a Restricted Party itself; (ii) the
transfer or sale, in one or a series of transactions, of not more than
forty-nine percent (49%) of the stock in a Restricted Party (other than
Guarantor); provided, however, no such transfer or sale shall result in the
change of voting control in such Restricted Party; (iii) the transfer or sale,
in one or a series of transactions, of not more than forty-nine percent (49%) of
the limited partnership interests or non-managing membership interests (as the
case may be) in a Restricted Party (other than Guarantor); provided, however, no
such transfer or sale shall result in the change of voting control in such
Restricted Party; (iv) the transfer or sale by Sponsor, in one or a series of
transactions, of not more than twenty-five percent (25%) of the general
partnership interests in Guarantor; provided, however, no such transfer or sale
shall result in the change of voting control in Guarantor; and (v) the transfer
or sale by any limited partner of Guarantor, in one or a series of transactions,
of not more than forty-nine percent (49%) of the limited partnership interests
in Guarantor; provided, however, no such transfer or sale shall result in the
change of voting control in Guarantor. In connection with any such transfer or
sale pursuant to clauses (ii)
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through (v) above, and as a condition to each such transfer or sale, Lender
shall receive not less than ten (10) days prior written notice of such proposed
transfer or sale.
(e) Borrower agrees to bear and shall reimburse Lender on demand all
reasonable expenses incurred by Lender in connection with any transaction
described in this Section 5.2.13.
(f) Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon any violation of this Section 5.2.13.
(g) The provisions of this Section 5.2.13 shall not be modified or amended
by Borrower and Lender unless the Rating Agencies have confirmed that such
amendment or modification will not result in a downgrade, qualification or
withdrawal of the then current ratings assigned to the Securities.
(h) Nothing contained in this Section 5.2.13 or in any other provision of
this Agreement or in any of the other Loan Documents shall limit or prohibit
transfers, sales, pledges or issuance of direct interests in Sponsor (the
"TRADED ENTITY"); provided the Traded Entity complies with the provisions of
Section 5.3 hereof.
(i) Notwithstanding the preceding provisions of this Section 5.2.13,
Borrower upon prior consent of Lender (which shall not be unreasonably withheld
upon receipt of such information pertaining to such transfer as Lender may
request) may (i) make transfers of immaterial portions of the Property to
Governmental Authorities in connection with a Condemnation of such immaterial
portions of the Property for dedication or public use, and (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for water and sewer lines, telephone and telegraph lines, electric
lines and other utilities or for other similar purposes, provided that no such
transfer, described in the foregoing clauses (i) and (ii) shall materially
impair the utility and operation of the Property or materially adversely affect
the value of the Property or materially adversely affect Borrower's ability to
pay the Debt, the Interest Only Payment Amount or the Monthly Debt Service
Payment Amount. Lender shall approve or disapprove such transfers or easements
within thirty (30) days after receipt of all information pertaining thereto by
Borrower.
(j) Notwithstanding anything to the contrary contained in this Section
5.2.13 and except with respect to the Person to whom an Individual Property is
sold or conveyed pursuant to Section 5.2.13(b) hereof, Sponsor must continue to
control Borrower and Guarantor and own, directly or indirectly, at least a 51%
interest in Borrower and in Guarantor.
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a transfer in violation of this Section
5.2.13. This provision shall apply to every transfer regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
transfer. Notwithstanding anything to the contrary contained in this Section
5.2.13, (a) no transfer shall be made to any Prohibited Person and (b) in the
event any transfer results in any Person owning in excess of forty-nine percent
(49%) of the ownership interest in any direct or indirect owner of Borrower or
Guarantor and a Securitization has occurred, Borrower shall, prior
65
to such transfer, deliver an updated Insolvency Opinion to Lender, which opinion
shall be in form, scope and substance acceptable in all respects to Lender and
the Rating Agencies.
SECTION .3 TRADED SHARES.
The Traded Entity shall cause its issued and outstanding shares of
stock or other ownership units to be listed for trading on the New York Stock
Exchange or such other nationally recognized stock exchange throughout the term
of the Loan.
INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
SECTION .1 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Properties 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, but the amount shall in no event be less than the Release
Amount applicable to the Individual Property; (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 $25,000; (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the
Individual Property shall at any time constitute legal non-conforming
structures or uses; (E) providing coverage for the peril of Sprinkler
Leakage; and (F) providing Comprehensive Plate Glass Insurance. 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 Release Amount applicable to the Individual Property
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 insurance
in amounts and in form and substance satisfactory to Lender in the event
the Individual 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 Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a limit, per occurrence, of not less than One
Million and No/100 Dollars ($1,000,000) and an aggregate limit of Two
Million and No/100 Dollars ($2,000,000); (B) to continue at not less than
the aforesaid limit until required to be changed by Lender in writing by
reason
66
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 10
of the Security Instruments to the extent the same is available;
(iii) business interruption/loss of rents insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; (C) in an amount equal to
100% of the projected gross income from each Individual Property (on an
actual loss sustained basis) for a period of twelve (12) months; the amount
of such business interruption/loss of rents insurance shall be determined
prior to the Closing Date and at least once each year thereafter based on
the greatest of: (x) Borrower's reasonable estimate of the gross income
from each Individual Property and (y) the highest gross income received
during the term of the Note for any full calendar year prior to the date
the amount of such insurance is being determined, in each case for the
succeeding twelve (12) month period and (D) containing an extended period
of indemnity endorsement which provides that after the physical loss to the
Improvements and the Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of twelve (12) months
from the date that the applicable Individual Property is repaired or
replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period;
All insurance proceeds payable to Lender pursuant to this subsection shall
be held by Lender and shall be applied to the obligations secured hereunder
from time to time due and payable hereunder and under the Note and this
Agreement; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured
hereunder on the respective dates of payment provided for in the Note and
this Agreement except to the extent such amounts are actually paid out of
the proceeds of such business interruption/loss of rents insurance;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if
the Individual 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
Individual Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
State in which each Individual Property is located, and employer's
liability insurance with a limit of at least $1,000,000 per accident and
per disease per employee, and $1,000,000 for disease aggregate in respect
of any work or operations on or about the Individual Property, or in
connection with the Individual Property or its operation (if applicable);
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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
$25,000,000 per occurrence and $25,000,000 in the aggregate on terms
consistent with the commercial general liability insurance policy required
under subsection (ii) above;
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits
per occurrence, including umbrella coverage, of not less than $1,000,000;
(ix) [intentionally deleted];
(x) [intentionally deleted];
(xi) [intentionally deleted]; and
(xii) 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 Individual
Property located in or around the region in which the Individual Property
is located.
(b) No Policy shall contain an exclusion from coverage under such Policy
for loss or damage incurred as a result of an act of terrorism (including
bio-terrorism) or similar acts of sabotage. If a Policy contains such exclusion,
Borrower shall obtain a separate Policy providing coverage for loss or damage
incurred as a result of an act of terrorism (including bio-terrorism) or similar
acts of sabotage if such coverage is commercially available at commercially
reasonable rates.
(c) All insurance provided for in Section 6.1(a) hereof shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the approval of Lender as to
insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State in which each Individual
Property is located and approved by Lender. The insurance companies must have a
claims paying ability/financial strength rating of "A" (or its equivalent) or
better by at least two (2) of the Rating Agencies (one of which shall be S&P).
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.
(d) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is approved in advance in
writing by Lender and Lender's interest is included therein as provided in this
Agreement and such Policy is issued by a
68
Qualified Insurer, or (ii) separate insurance concurrent in form or contributing
in the event of loss with that required in Section 6.1(a) hereof to be furnished
by, or which may be reasonably required to be furnished by, Borrower. In the
event Borrower obtains separate insurance or an umbrella or a blanket policy,
Borrower shall notify Lender of the same and shall cause certified copies of
each Policy to be delivered as required in Section 6.1(a) hereof. Any blanket
insurance Policy shall specifically allocate to the Individual 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
Individual Property in compliance with the provisions of Section 6.1(a) hereof.
Notwithstanding Lender's approval of any umbrella or blanket liability or
casualty Policy hereunder, Lender reserves the right, in its sole discretion, to
require Borrower to obtain a separate Policy in compliance with this Section
6.1.
(e) All Policies provided for or contemplated by Section 6.1(a) hereof,
except for the Policy referenced in Section 6.1(a)(v), shall name Borrower and
Lender as the insured or additional insured, as their respective 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.
(f) All Policies provided for in Section 6.1(a)(v) hereof 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) each Policy shall provide that the issuers thereof shall give
written notice to Lender if the Policy has not been renewed thirty (30)
days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder.
(g) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Properties, 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 by Borrower
to Lender upon demand and, until paid, shall be secured by the Security
Instruments and shall bear interest at the Default Rate.
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(h) Borrower shall furnish to Lender, on or before thirty (30) days after
the close of each of Borrower's fiscal years, a statement certified by Borrower
or a duly authorized officer of Borrower of the amounts of insurance maintained
in compliance herewith, of the risks covered by such insurance and of the
insurance company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.
SECTION .2 CASUALTY. If the Individual Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the completion of the repair and restoration
of the Individual Property as nearly as possible to the condition the Individual
Property was in immediately prior to such Casualty, with such alterations as may
be reasonably approved by Lender (a "RESTORATION") and otherwise in accordance
with Section 6.4 hereof. Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance. Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower.
SECTION .3 CONDEMNATION. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of all
or any part of any Individual Property and shall deliver to Lender copies of any
and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including, but not limited to, any transfer made in lieu of or in anticipation
of the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt. Lender shall not be
limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If any Individual Property or any portion thereof is
taken by a condemning authority, Borrower shall promptly commence and diligently
prosecute the Restoration of the applicable Individual Property and otherwise
comply with the provisions of Section 6.4 hereof. If any Individual 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 .4 RESTORATION. The following provisions shall apply in connection
with the Restoration of the Properties:
(a) If the Net Proceeds shall be less than Four Million and 00/100 Dollars
($4,000,000) (on an aggregate basis for all of the Properties affected by a
Casualty or Condemnation) and the costs of completing the Restoration shall be
less than Four Million and 00/100 Dollars ($4,000,000) (on an aggregate basis
for all of the Properties affected by a Casualty or Condemnation), the Net
Proceeds will be disbursed by Lender to Borrower upon
70
receipt, provided that all of the conditions set forth in Section 6.4(b)(i) 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 Four Million and
00/100 Dollars ($4,000,000) (on an aggregate basis for all of the Properties
affected by a Casualty or Condemnation) or the costs of completing the
Restoration is equal to or greater than Four Million and 00/100 Dollars
($4,000,000) (on an aggregate basis for all of the Properties affected by a
Casualty or Condemnation), Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4. The term "NET
PROCEEDS" shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and (vii) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same ("INSURANCE PROCEEDS"), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same ("CONDEMNATION PROCEEDS"),
whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds, less
than twenty-five percent (25%) of the total aggregate floor area of the
Improvements on the Properties has been damaged, destroyed or rendered unusable
as a result of such Casualty or (2) in the event the Net Proceeds are
Condemnation Proceeds, less than ten percent (10%) of the land constituting the
Properties is taken, and such land is located along the perimeter or periphery
of the Properties affected by such Condemnation, and no portion of the
Improvements is located on such land;
(C) Intentionally Deleted;
(D) Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than sixty (60) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue the
same to satisfactory completion in accordance with all applicable laws,
including, without limitation, all applicable Environmental Laws;
(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 Properties as a result of the occurrence of any
such Casualty or Condemnation, whichever the case may be, will be covered out of
(1) the Net Proceeds, (2) the insurance coverage referred to in Section
6.1(a)(iii) hereof, if applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration will be completed
on or before the earliest to occur of (1) six (6) months prior to the Maturity
Date, (2) six (6) months after the occurrence of such Casualty or Condemnation,
(3) the earliest date required for such completion under the terms of any
Leases, if any, which are required in accordance with the provisions of this
Section 6.4(b) to remain in effect subsequent to the occurrence of such
71
Casualty or Condemnation and the completion of the Restoration, (4) such time as
may be required under applicable zoning law, ordinance, rule or regulation, in
order to repair and restore the Properties affected by such Casualty or
Condemnation to the condition they were in immediately prior to such Casualty or
Condemnation or (5) the expiration of the insurance coverage referred to in
Section 6.1(a)(iii) hereof;
(G) the Properties affected by such Casualty or Condemnation and the
use thereof after the Restoration will be in compliance with and permitted under
all applicable zoning laws, ordinances, rules and regulations;
(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); and
(I) such Casualty or Condemnation, as applicable, does not result in
the total loss of access to the Properties affected by such Casualty or
Condemnation or the related Improvements.
(J) Borrower shall deliver, or cause to be delivered, to Lender a
signed detailed budget approved in writing by Borrower's architect or engineer
stating the entire cost of completing the Restoration, which budget shall be
acceptable to Lender;
(K) 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, or, if not sufficient, Borrower shall deposit the
deficiency with Lender; and
(L) the Management Agreement in effect as of the date of the
occurrence of such Casualty or Condemnation, whichever the case may be, shall
(1) remain in full force and effect during the Restoration and shall not
otherwise terminate as a result of the Casualty or Condemnation or the
Restoration or (2) if terminated, shall have been replaced with a Replacement
Management Agreement with a Qualifying Manager, prior to the opening or
reopening of the Properties affected by such Casualty or Condemnation or any
portion thereof for business with the public.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with the
provisions of this Section 6.4(b), shall constitute additional
security for the Debt and other obligations under the Loan Documents.
The Net Proceeds shall be disbursed by Lender to, or as directed by,
Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all materials
installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens
or notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Individual Property which
have not either been fully bonded to the satisfaction of Lender and
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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, the cost of which is greater than $100,000, shall be
subject to prior review and acceptance in all respects by Lender and
by an independent consulting engineer selected by Lender (the
"CASUALTY CONSULTANT"). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or
obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the
Restoration, the cost of which is greater than $100,000, as well as
the contracts under which they have been engaged, shall be subject to
prior review and acceptance by Lender and the Casualty Consultant. All
costs and expenses incurred by Lender in connection with making the
Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, minus the
Casualty Retainage. The term "CASUALTY RETAINAGE" shall mean an amount
equal to ten percent (10%) of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for
the re-occupancy and use of the Individual Property have been obtained
from all appropriate Governmental Authorities, and Lender receives
evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the 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 for the related Individual Property, and Lender
receives an endorsement to such Title Insurance Policy insuring the
continued priority of the lien of the related Security Instrument 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
73
company, if any, which has issued a payment or performance bond with
respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the
Casualty Consultant, if any, 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.
(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, 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. If
Lender shall receive and retain Net Proceeds, the Lien of the Security
Instruments shall be reduced only by the amount thereof received and retained by
Lender and actually applied by Lender in reduction of the Debt.
(d) In the event of foreclosure of the Security Instrument with respect to
the Individual Property, or other transfer of title to the Individual 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 Individual 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) The provisions of subsection 4 of Section 254 of the New York Real
Property Law covering the insurance of buildings against loss by fire shall not
apply to this Agreement. In the event of any conflict, inconsistency or
ambiguity between the provisions of Section 6.4 hereof and the provisions of
subsection 4 of Section 254 of the New York Real Property Law
74
covering the insurance of buildings against loss by fire, the provisions of
Section 6.4 hereof shall control.
RESERVE FUNDS
SECTION .1 REQUIRED REPAIR FUNDS.
.1.1 DEPOSITS.
On the Closing Date, Borrower shall deposit with Lender the amount for
each Individual Property set forth on Schedule 7.1.1 attached hereto to perform
the Required Repairs for such Individual Property. Amounts so deposited with
Lender shall be held by Lender in accordance with Section 7.6 hereof. Amounts so
deposited shall hereinafter be referred to as Borrower's "Required Repair Fund."
Borrower shall perform the repairs at the Properties, as more particularly set
forth on Schedule 7.1.1 attached hereto (such repairs hereinafter referred to as
"REQUIRED REPAIRS"). Borrower shall complete the Required Repairs on or before
the required deadline for each repair as set forth on Schedule 7.1.1 attached
hereto. It shall be an Event of Default under this Agreement if (a) Borrower
does not complete the Required Repairs at each Individual Property by the
required deadline for each repair as set forth on Schedule 7.1.1 attached
hereto, or (b) Borrower does not satisfy each condition contained in Section
7.1.2 hereof. Upon the occurrence of 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 one
or more of the Properties 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.
.1.2 RELEASE OF REQUIRED REPAIR FUNDS.
Lender shall disburse to Borrower the Required Repair Funds from the
Required Repair Account from time to time upon satisfaction by Borrower of each
of the following conditions: (a) Borrower shall submit a written request for
payment to Lender at least thirty (30) days prior to the date on which Borrower
requests such payment be made and specifies the Required Repairs to be paid, (b)
on the date such request is received by Lender and on the date such payment is
to be made, no Default or Event of Default shall exist and remain uncured, (c)
Lender shall have received an Officer's Certificate (i) stating that all
Required Repairs at the applicable Individual Property to be funded by the
requested disbursement have been completed in good and workmanlike manner and,
to the best of Borrower's knowledge, in accordance with all Legal Requirements
and Environmental Laws, such certificate to be accompanied by a copy of any
license, permit or other approval by any Governmental Authority required to
commence and/or complete the Required Repairs, (ii) identifying each Person that
supplied materials or labor in connection with the Required Repairs performed at
such Individual Property with respect to the reimbursement to be funded by the
requested disbursement, and (iii) stating that each such Person has been paid in
full upon such disbursement, such Officer's Certificate to be accompanied by
lien waivers or other evidence of payment satisfactory to Lender, (d) at
Lender's option, a title search for such Individual Property indicating that
such Individual
75
Property is free from all Liens, claims and other encumbrances not previously
approved by Lender, and (e) Lender shall have received such other evidence as
Lender shall reasonably request that the Required Repairs at such Individual
Property to be funded by the requested disbursement have been completed and are
paid for upon such disbursement to Borrower. Lender shall not be required to
make disbursements from the Required Repair Account with respect to any
Individual Property unless such requested disbursement is in an amount greater
than $25,000 (or a lesser amount if the total amount in the Required Repair
Account is less than $25,000, in which case only one disbursement of the amount
remaining in the account shall be made). Lender shall not be obligated to make
disbursements from the Required Repair Account with respect to an Individual
Property in excess of the amount allocated for such Individual Property as set
forth on Schedule 7.1.1 attached hereto. Upon the earlier of (1) Borrower's
completion of all Required Repairs to the satisfaction of Lender (provided
Borrower has supplied Lender with evidence satisfactory to Lender of payment of
all Required Repairs applicable to such Individual Property and, if requested by
Lender, waivers of liens and/or, in the case of Required Repairs greater than
$100,000.00, a title search of the Property or an endorsement to the mortgagee's
title insurance policy), (2) payment in full by Borrower of all sums evidenced
by the Note and secured by the Security Instruments and release by Lender of the
lien of the Security Instruments, or (3) release of such Individual Property in
accordance with the provisions of Section 2.5 hereof, Lender shall disburse to
Borrower all remaining Required Repair Funds allocated to such Individual
Property as set forth on Schedule 7.1.1 attached hereto.
SECTION .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) at
the option of Lender, if the liability or casualty Policy maintained by Borrower
covering the Properties shall not constitute an approved blanket or umbrella
Policy pursuant to Section 6.1(c) hereof, or Lender shall require Borrower to
obtain a separate Policy pursuant to Section 6.1(c) hereof, an amount equal to
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 hereinafter called the "TAX AND INSURANCE ESCROW
FUND"). In the event Lender shall elect to collect payments in escrow for
Insurance Premiums pursuant to clause (b) above, Borrower shall pay to Lender an
initial deposit to be determined by Lender, in its sole discretion, to increase
the amounts in the Tax and Insurance Escrow Fund to an amount which, together
with anticipated monthly deposits for the payment of Insurance Premiums, shall
be sufficient to pay all Insurance Premiums as they become due. 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 Sections 5.1.2 and 6.1 hereof, respectively. 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),
without
76
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. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 5.1.2 and 6.1
hereof, respectively, Lender shall, in its sole discretion, return any excess to
Borrower or credit such excess against future payments to be made to the Tax and
Insurance Escrow Fund. Any amount remaining in the Tax and Insurance Escrow Fund
after the Debt has been paid in full shall be returned to Borrower. In
allocating such excess, Lender may deal with the Person shown on the records of
Lender to be the owner of the Properties. If at any time Lender reasonably
determines that the Tax and Insurance Escrow Fund is not or will not be
sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a) and
(b) above, Lender shall notify Borrower of such determination and Borrower shall
increase its monthly payments to Lender by the amount that Lender estimates is
sufficient to make up the deficiency at least thirty (30) days prior to
delinquency of the Taxes and/or thirty (30) days prior to expiration of the
Policies, as the case may be. Any amount held in the Tax and Insurance Escrow
Fund and allocated for an Individual Property shall be retained by Lender and
credited toward the future payments of Taxes and Insurance Premiums required by
Lender hereunder in the event such Individual Property is released from the Lien
of its related Security Instrument in accordance with Section 2.5 hereof.
SECTION .3 REPLACEMENTS AND REPLACEMENT RESERVE.
.3.1 REPLACEMENT RESERVE FUND. Borrower shall pay to Lender on each Payment
Date the Replacement Reserve Monthly Deposit for replacements and repairs
required to be made to the Properties during the calendar year (collectively,
the "REPLACEMENTS"). Amounts so deposited shall hereinafter be referred to as
Borrower's "REPLACEMENT RESERVE FUND" and the account in which such amounts are
held shall hereinafter be referred to as Borrower's "REPLACEMENT RESERVE
ACCOUNT". Lender may reassess its estimate of the amount necessary for the
Replacement Reserve Fund from time to time, and may increase the monthly amounts
required to be deposited into the Replacement Reserve Fund upon thirty (30) days
notice to Borrower if Lender determines in its reasonable discretion that an
increase is necessary to maintain the proper maintenance and operation of the
Properties. Any amount held in the Replacement Reserve Account and allocated for
an Individual Property shall be retained by Lender and credited toward the
future Replacement Reserve Monthly Deposits required by Lender hereunder in the
event such Individual Property is released from the Lien of its related Security
Instrument in accordance with Section 2.5 hereof.
.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 an Individual Property or for costs which are to be
reimbursed from the Required Repair Fund. Lender shall not be obligated to make
disbursements from the Replacement Reserve Account with respect to an Individual
Property in excess of the amount allocated for such Individual Property as set
forth on Schedule 7.3.2 attached hereto.
77
(b) Lender shall, upon written request from Borrower and satisfaction of
the requirements set forth in this Section 7.3.2, disburse to Borrower amounts
from the Replacement Reserve Account necessary to pay for the actual approved
costs of Replacements or to reimburse Borrower therefor, upon completion of such
Replacements (or, upon partial completion in the case of Replacements made
pursuant to Section 7.3.2(e)) 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 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, to the best of Borrower's
knowledge, all Replacements have been made in accordance with all applicable
Legal Requirements of any Governmental Authority having jurisdiction over the
applicable Individual Property to which the Replacements are being provided.
Each request for disbursement shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided and, unless
Lender has agreed to issue joint checks as described below in connection with a
particular Replacement, each request shall include evidence satisfactory to
Lender of payment of all such amounts. Except as provided in Section 7.3.2(e)
hereof, each request for disbursement from the Replacement Reserve Account shall
be made only after completion of the Replacement for which disbursement is
requested. Borrower shall provide Lender evidence of completion 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 $25,000 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 applicable Individual 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 $50,000, (ii) the contractor
performing such Replacement requires periodic payments pursuant to terms of a
written contract, and
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(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 applicable Individual
Property and are properly secured or have been installed in such Individual
Property, (C) all other conditions in this Section 7.3 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 with the final disbursement) the total cost of all Replacements in
any request shall not be less than $50,000.
.3.3 PERFORMANCE OF REPLACEMENTS. (a) Borrower shall make Replacements when
required in order to keep each Individual Property in condition and repair
consistent with other properties in the same market segment in the metropolitan
area in which the respective Individual Property is located (but at all times
consistent with the standards of other "U-Store-It" properties, irrespective of
whether such Individual Property is currently operated as a "U-Store-It"
self-service storage facility), and to keep each Individual Property or any
portion thereof from deteriorating. Borrower shall complete all Replacements in
a good and workmanlike manner as soon as practicable following the commencement
of making each such Replacement.
(b) Lender reserves the right, at its option, to approve all contracts or
work orders with materialmen, mechanics, suppliers, subcontractors, contractors
or other parties providing labor or materials in connection with the
Replacements costing, in the aggregate, in excess of $50,000 with respect to
each Individual Property. Upon Lender's request, Borrower shall assign any
contract or subcontract to Lender.
(c) In the event Lender determines in its reasonable discretion that any
Replacement is not being performed in a workmanlike or timely manner or that any
Replacement has not been completed in a workmanlike or timely manner, Lender
shall have the option to withhold disbursement for such unsatisfactory
Replacement and to proceed under existing contracts or to contract with third
parties to complete such Replacement and to apply the Replacement Reserve Fund
toward the labor and materials necessary to complete such Replacement, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon an Event of Default hereunder.
(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to Section 7.3.3(c) above, Borrower grants Lender the
right to enter onto any Individual Property and perform any and all work and
labor necessary to complete or make the Replacements and/or employ watchmen to
protect such Individual Property from damage. All sums so expended by Lender, to
the extent not from the Replacement Reserve Fund, shall be deemed to have been
advanced under the Loan to Borrower and secured by the Security Instruments. For
this purpose,
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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. 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 any Individual 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 any Individual Property or the
rehabilitation and repair of any Individual 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
each Individual 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 each
Individual 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 Individual Property at
Borrower's expense prior to making a monthly disbursement from the Replacement
Reserve Account in order to verify completion of the Replacements for which
reimbursement in excess of $10,000 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 reasonable 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).
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(i) Before each disbursement from the Replacement Reserve Account, Lender
may require Borrower to provide Lender with a search of title to the applicable
Individual 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 applicable Individual Property since the date of
recordation of the related Security Instrument and that title to such Individual
Property is free and clear of all Liens (other than the lien of the related
Security Instrument 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 applicable Individual
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.
.3.4 FAILURE TO MAKE REPLACEMENTS. (a) It shall be an Event of Default
under this Agreement if Borrower fails to comply with any provision of this
Section 7.3 and such failure is not cured within thirty (30) days after notice
from Lender. Upon the occurrence of such an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose, including but
not limited to completion of the Replacements as provided in Section 7.3.3, or
for any other repair or replacement to any Individual 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.
.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The insufficiency of any
balance in the Replacement Reserve Account shall not relieve Borrower from its
obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
SECTION .4 INTENTIONALLY DELETED.
SECTION .5 LEASING RESERVE FUND.
.5.1 DEPOSITS TO LEASING RESERVE FUND. All Lease Termination Payments shall
be deposited in the Leasing Reserve Account with and held by Lender for tenant
improvement and leasing commission obligations incurred in connection with the
re-leasing of the space demised
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under the related Lease. Amounts so deposited shall hereinafter be referred to
as the "Leasing Reserve Fund".
.5.2 WITHDRAWALS OF LEASING RESERVE FUNDS. Lender shall make disbursements
from the Leasing Reserve Fund for tenant improvement and leasing commission
obligations incurred by Borrower in connection with the re-leasing of the space
demised under the related Lease. All such expenses shall be approved by Lender
in its sole discretion. Lender shall make disbursements as requested by Borrower
on a monthly basis in increments of no less than $50,000.00 upon delivery by
Borrower of Lender's standard form of draw request accompanied by copies of paid
invoices for the amounts requested and, if required by Lender, lien waivers and
releases from all parties furnishing materials and/or services in connection
with the requested payment. Lender may require an inspection of the applicable
Individual Property at Borrower's expense prior to making a quarterly
disbursement in order to verify completion of improvements for which
reimbursement is sought. All earnings or interest on the Leasing Reserve Fund
shall be and become part of such Leasing Reserve Fund and shall be disbursed as
provided in this Section 7.5.
SECTION .6 RESERVE FUNDS, GENERALLY.
(a) 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.
(b) 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.
(c) The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
(d) The Reserve Funds shall be held in interest bearing accounts and all
earnings or interest on a Reserve Fund shall be added to and become a part of
such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund.
(e) 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.
(f) Lender shall not be liable for any loss sustained on the investment of
any funds constituting the Replacement Reserve Fund.
(g) Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the related Accounts or the performance of the
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obligations for which the Reserve Funds or the related Accounts were
established, except to the extent arising from the gross negligence or willful
misconduct of Lender, its agents or employees or arising from the failure of
Lender to disburse funds from the Reserve Funds or related Accounts when
required to do so hereunder. Borrower shall assign to Lender all rights and
claims Borrower may have against all Persons supplying labor, materials or other
services which are to be paid from or secured by the Reserve Funds or the
related Accounts; provided, however, that Lender may not pursue any such right
or claim unless an Event of Default has occurred and remains uncured.
DEFAULTS
SECTION .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 on or prior to the date
when due and payable;
(ii) if any of the Taxes or Other Charges are not paid on or prior to
the date when the same are due and payable;
(iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender upon request;
(iv) if Borrower transfers or encumbers any portion of the Properties
without Lender's prior written consent or otherwise violates the provisions
of Section 5.2.13 hereof or Article 7 of any Security Instrument;
(v) if any representation or warranty made by Borrower, the SPC Party
or Guarantor 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, the SPC Party, Guarantor or any other guarantor
under any guaranty issued in connection with the Loan shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, the SPC Party, Guarantor or any other guarantor under any
guaranty issued in connection with the Loan or if Borrower, the SPC Party,
Guarantor or such other guarantor shall be adjudicated a bankrupt or
insolvent, or if any petition for bankruptcy, reorganization or arrangement
pursuant to the Bankruptcy Code, or any similar Federal or State law, shall
be filed by or against, consented to, or acquiesced in by, Borrower, the
SPC Party, Guarantor or such other guarantor, or if any proceeding for the
dissolution or liquidation of Borrower, the SPC Party, Guarantor or such
other guarantor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was
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involuntary and not consented to by Borrower, the SPC Party, Guarantor or
such other guarantor, upon the same not being discharged, stayed or
dismissed within sixty (60) 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 the Insolvency Opinion, or
in any other "non-consolidation" opinion delivered to Lender in connection
with the Loan, or in any other "non-consolidation" delivered subsequent to
the closing of the Loan, is or shall become untrue in any material respect;
(xii) if Borrower violates or does not comply with any of the
provisions of Section 5.1.20 hereof;
(xiii) if a default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any Replacement Management
Agreement) if such default permits the Manager thereunder to terminate or
cancel the Management Agreement (or any Replacement Management Agreement)
unless in such case Borrower shall enter into a Replacement Management
Agreement in accordance with the terms hereof;
(xiv) if any Individual Property becomes subject to any mechanic's,
materialman's or other Lien other than a Lien for local real estate taxes
and assessments not then due and payable and the Lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of
thirty (30) days;
(xv) if any Federal tax Lien or State or local income tax Lien is
filed against Borrower, SPC Party, any Guarantor or any Individual Property
and same is not discharged of record within thirty (30) days after same is
filed;
(xvi) (A) Borrower fails to timely provide Lender with the written
certification and evidence referred to in Section 5.2.12 hereof, (B)
Borrower is a Plan or its assets constitute Plan Asset; or (C) Borrower
consummates a transaction which would cause the Security Instruments or
Lender's exercise of its rights under the Security Instruments, the Note,
this Agreement or the other Loan Documents to constitute a nonexempt
prohibited transaction under ERISA or result in a violation of a State
statute regulating governmental plans, subjecting Lender to liability for a
violation of ERISA, the Code, a State statute or other similar law;
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(xvii) if Borrower shall fail to deliver to Lender, within ten (10)
days after request by Lender, the estoppel certificates required pursuant
to the terms of Section 5.1.15(a) hereof;
(xviii) if any default occurs under any guaranty or indemnity executed
in connection herewith (including, without limitation, the Guaranty and the
Environmental Indemnity) and such default continues after the expiration of
applicable grace periods, if any;
(xix) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure debt
or other security agreement covering any part of any Individual Property
whether it be superior or junior in lien to the related Security
Instrument;
(xx) if Borrower operates any Individual Property (other than the
Properties set forth on Schedule 4.1.31 attached hereto) under the name
other than "U-Store-It", without Lender's prior written consent;
(xxi) [intentionally deleted];
(xxii) [intentionally deleted];
(xxiii) if there shall be a default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or any Individual 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;
or
(xxiv) 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 (xxiii) 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 thirty (30) day period and provided further that Borrower shall
have commenced to cure such Default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such
thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed sixty (60) days.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter, in addition to any other rights or remedies available to it pursuant
to this Agreement and the other Loan Documents or at law or in equity, Lender
may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in and to all or any
Individual Property, including, without limitation, declaring the Debt to be
immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and any
or all of the Properties, including, without limitation, all
85
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 .2 REMEDIES.
(a) Upon the occurrence of an Event of Default, all or any one or more of
the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to all or any
Individual 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 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 Properties and each
Security Instrument has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Properties, nothing contained herein
or in any other Loan Document shall be construed as requiring Lender to resort
to any Individual Property for the satisfaction of any of the Debt in preference
or priority to any other Individual Property, and Lender may seek satisfaction
out of all of the Properties or any part thereof, in its absolute discretion in
respect of the Debt. In addition, Lender shall have the right from time to time
to partially foreclose the Security Instruments in any manner and for any
amounts secured by the Security Instruments 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 one or more of the Security Instruments 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 one or more of the Security Instruments to recover so much
of the principal balance of the Loan as Lender may accelerate and such other
sums secured by one or more of the Security Instruments as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Security Instruments to secure payment of the Debt 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
86
discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrower shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true
and lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect the aforesaid severance,
Borrower ratifying all that its said attorney shall do by virtue thereof;
provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. Except as may
be required in connection with a Securitization pursuant to Section 9.1 hereof,
(i) 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 (ii) 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.
SECTION .3 REMEDIES CUMULATIVE; WAIVERS.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singularly, concurrently or otherwise, at such time
and in such order as Lender may determine in Lender's sole discretion. No delay
or omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.
SPECIAL PROVISIONS
SECTION .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
use reasonable efforts 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 Security Instruments, including, without limitation, to:
(a) (i) provide such financial and other information with respect to
the Properties, Borrower, Guarantor and the Manager, (ii) provide
budgets
87
relating to the Properties and (iii) at Lender's cost, 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 Properties,
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) if required by the Rating Agencies, deliver (i) a revised
Insolvency Opinion, (ii) revised or additional opinions of
counsel as to due execution and enforceability with respect to
the Properties, Borrower, any Guarantor and Manager and their
respective Affiliates and the Loan Documents, and (iii) revised
organizational documents for Borrower, any Guarantor and Manager
and their respective Affiliates (including without limitation,
such revisions as are necessary to comply with the provisions of
Section 4.1.30 hereof, and if required by any Rating Agency,
amend such organizational documents to require that there shall
be two (2) Independent Directors serving in such capacity at all
times), which counsel, opinions, and organizational documents
shall be satisfactory to Lender and the Rating Agencies;
(c) make such representations and warranties as of the closing date
of the Securitization with respect to the Properties, Borrower,
Guarantor, Manager and the Loan Documents as are customarily
provided in securitization transactions and as may be reasonably
requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents;
(d) execute such amendments to the Loan Documents and Borrower's
organizational documents as may be requested by the holder of the
Note or the Rating Agencies or otherwise to effect the
Securitization including (i) bifurcating the Note into two or
more notes and splitting the Security Instrument into two
mortgages, including a first priority mortgage or otherwise as
determined by and acceptable to Lender or (ii) dividing the Note
into multiple components corresponding to tranches of
certificates to be issued in a Securitization each having a
notional balance and an interest rate determined by Lender;
provided, however, that Borrower shall not be required to modify
or amend any Loan Document if the overall effect of such
modification or amendment would (i) change the interest rate, the
stated maturity (as the same may be extended pursuant to this
Agreement) or the amortization of principal set forth in the
Note, or (ii) modify or amend any other material economic term of
the Loan;
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(e) if Lender elects, in its sole discretion, prior to or upon a
Securitization, to split the Loan into two or more parts, or the
Note into multiple component notes or tranches which may have
different interest rates, amortization payments, principal
amounts and maturities, Borrower agrees to cooperate with Lender
in connection with the foregoing and to execute the required
modifications and amendments to the Note, this Agreement and the
Loan Documents and to provide opinions necessary to effectuate
the same. Such Notes or components may be assigned different
interest rates, so long as the initial weighted average of such
interest rates does not exceed the Applicable Interest Rate ;and
(f) supply to Lender such documentation, financial statements and
reports in form and substance required for Lender to comply with
the Federal securities law, if applicable.
All reasonable third party costs and expenses incurred by Lender or
Borrower in connection with Borrower's complying with requests made under this
Section 9.1 shall be paid by Lender (other than the fees and expenses of
Borrower's counsel).
SECTION .2 SECURITIZATION INDEMNIFICATION.
(a) 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, private
placement memorandum, offering circular or other offering document (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.
(b) Borrower agrees to provide in connection with each of (i) a preliminary
and a final private placement memorandum, (ii) a preliminary and final
prospectus or prospectus supplement, as applicable, or (iii) collateral and
structured term sheets or similar materials, an indemnification certificate (A)
certifying that Borrower has carefully examined such memorandum, prospectus or
term sheets, as applicable, including without limitation, the sections entitled
"Special Considerations," "Description of the Mortgages," "Description of the
Mortgage Loans and Mortgaged Property," "The Manager," "The Borrower" and
"Certain Legal Aspects of the Mortgage Loan," and such sections (and any other
sections reasonably requested) do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading, (B) indemnifying Lender (and for purposes of this Section 9.2,
Lender hereunder shall include its officers and directors), the Affiliate of
▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇") that
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has filed the registration statement relating to the Securitization (the
"REGISTRATION STATEMENT"), each of its directors, each of its officers who have
signed the Registration Statement and each Person or entity who controls the
Affiliate within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (collectively, the "▇▇▇▇▇▇ GROUP"), and ▇▇▇▇▇▇, each of its
directors and each Person who controls ▇▇▇▇▇▇ within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act (collectively, the
"UNDERWRITER GROUP") for any losses, claims, damages or liabilities
(collectively, the "LIABILITIES") to which Lender, the ▇▇▇▇▇▇ Group or the
Underwriter Group may become subject insofar as the Liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in such sections described in clause (A) above, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated in such sections or necessary in order to make the
statements in such sections or in light of the circumstances under which they
were made, not misleading and (C) agreeing to reimburse Lender, the ▇▇▇▇▇▇ Group
and the Underwriter Group for any legal or other expenses reasonably incurred by
Lender and ▇▇▇▇▇▇ in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under clauses
(B) or (C) above only to the extent that any such Liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the memorandum or prospectus or
in connection with the underwriting of the debt, including, without limitation,
financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Properties. This indemnification will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be
applicable based on information previously provided by Borrower or its
Affiliates if Borrower does not provide the indemnification certificate.
(c) In connection with filings under the Exchange Act, Borrower agrees to
indemnify (i) Lender, the ▇▇▇▇▇▇ Group and the Underwriter Group for Liabilities
to which Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Provided Information a material fact required
to be stated in the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the ▇▇▇▇▇▇ Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the ▇▇▇▇▇▇
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this Section 9.2
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
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(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section 9.2 the indemnifying party shall not be responsible for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnifications provided for in Section 9.2(b) or
(c) is or are for any reason held to be unenforceable by an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) ▇▇▇▇▇▇'▇ and Borrower's relative knowledge and access to information
concerning the matter with respect to which claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.
SECTION .3 INTENTIONALLY DELETED.
SECTION .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 Security Instruments or the other
Loan Documents by any action or proceeding wherein a money judgment shall be
sought against Borrower or any of its partners or members except that Lender may
bring a foreclosure action, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
its interest under the Note, this Agreement, the Security Instruments and the
other Loan Documents, or in the Properties, the Rents, or any other collateral
given to Lender pursuant to the Loan
91
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 Properties, in the Rents and in
any other collateral given to Lender, and Lender, by accepting the Note, this
Agreement, the Security Instruments 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 Security Instruments or the other Loan
Documents. The provisions of this Section shall not, however, (a) constitute a
waiver, release or impairment of any obligation evidenced or secured by any of
the Loan Documents; (b) impair the right of Lender to name Borrower as a party
defendant in any action or suit for foreclosure and sale under any of the
Security Instruments; (c) affect the validity or enforceability of any indemnity
(including, without limitation, the Environmental Indemnity), guaranty
(including, without limitation, the Guaranty), master lease or similar
instrument made in connection with the Loan Documents; (d) impair the right of
Lender to obtain the appointment of a receiver; (e) impair the enforcement of
any of the Assignments of Leases; (f) constitute a prohibition against Lender to
seek a deficiency judgment against Borrower in order to fully realize the
security granted by each of the Security Instruments or to commence any other
appropriate action or proceeding in order for Lender to exercise its remedies
against all of the Properties; or (g) constitute a waiver of the right of Lender
to enforce the liability and obligation of Borrower, by money judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability, claim or
other obligation incurred by Lender (including attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower, Guarantor or
any other guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower or
Guarantor;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in
the Security Instruments concerning Environmental Laws, hazardous
substances and asbestos and any indemnification of Lender with
respect thereto in either document;
(iv) the removal or disposal of any portion of the Properties after an
Event of Default;
(v) the misapplication or conversion by Borrower (but only to the
extent of such misapplication or conversion) of (A) any Insurance
Proceeds paid by reason of any loss, damage or destruction to the
Properties, (B) any Awards or other amounts received in
connection with the condemnation of all or a portion of the
Properties, or (C) any Rents following an Event of Default;
(vi) failure to pay Taxes, charges for labor or materials or Other
Charges that can create liens on any portion of the Properties;
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(vii) any security deposits, advance deposits or any other deposits
collected with respect to the Properties which are not delivered
to Lender upon a foreclosure of the Properties 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; and
(viii) Borrower's indemnifications of Lender set forth in Section 9.2
hereof.
Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt secured by the Security Instruments or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan
Documents, and (B) the Debt shall be fully recourse to Borrower in the event
that: (i) the first Interest Only Payment Amount is not paid when due; (ii)
Borrower fails to permit on-site inspections of the Properties, fails to provide
financial information, fails to maintain its status as a single purpose entity
or fails to appoint a new property manager upon the request of Lender after an
Event of Default, each as required by, and in accordance with the terms and
provisions of, this Agreement and the Security Instruments; (iii) Borrower fails
to obtain Lender's prior written consent to any subordinate financing or other
voluntary lien encumbering any Individual Property; (iv) Borrower fails to
obtain Lender's prior written consent to any assignment, transfer, or conveyance
of any Individual Property or any interest therein as required by the Security
Instrument or hereunder; or (v) if any Individual Property becomes an asset in a
bankruptcy or insolvency proceeding as a result of any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, filed by, or collusively arranged by, Borrower or any
Affiliates of Borrower.
SECTION .5 MANAGEMENT AGREEMENT.
(a) The Improvements on the Properties are operated and managed as
"U-Store-It" self-service storage facilities (other than the Properties set
forth on Schedule 4.1.31 attached hereto) under the terms and conditions of the
Management Agreement, which have been approved by Lender including the
management fees and any other items set forth therein. The Properties (other
than the Properties set forth on Schedule 4.1.31 attached hereto) shall at all
times continue to be operated as "U-Store-It" self-service storage facilities or
under such other tradename or trademark as may be approved by Lender. In no
event shall the management fees under the Management Agreement exceed four
percent (4%) of the gross income derived from the applicable Individual
Property. Borrower shall, (i) diligently perform and observe all of the terms,
covenants and conditions of the Management Agreement, on the part of Borrower to
be performed and observed to the end that all things shall be done which are
necessary to keep unimpaired the rights of Borrower under the Management
Agreement and (ii) promptly notify Lender of the giving of any notice by Manager
to Borrower of any default by Borrower in the performance or observance of any
of the terms, covenants or conditions of the Management Agreement on the part of
Borrower to be performed and observed and deliver to Lender a true copy of each
such notice. Borrower shall not surrender the Management Agreement, consent to
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the assignment by the Manager of its interest under the Management Agreement, or
terminate or cancel the Management Agreement, or modify, change, supplement,
alter or amend the Management Agreement, in any respect, either orally or in
writing. Borrower hereby assigns to Lender as further security for the payment
of the Debt and for the performance and observance of the terms, covenants and
conditions of this Agreement, all the rights, privileges and prerogatives of
Borrower to surrender the Management Agreement, or to terminate, cancel, modify,
change, supplement, alter or amend the Management Agreement, in any respect, and
any such surrender of the Management Agreement, or termination, cancellation,
modification, change, supplement, alteration or amendment of the Management
Agreement, without the prior consent of Lender shall be void and of no force and
effect. If Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
Borrower to be performed or observed, then, without limiting the generality of
the other provisions of this Agreement, and without waiving or releasing
Borrower from any of its obligations hereunder, Lender shall have the right, but
shall be under no obligation, to pay any sums and to perform any act or take any
action as may be appropriate to cause all the terms, covenants and conditions of
the Management Agreement on the part of Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that the
rights of Borrower in, to and under the Management Agreement shall be kept
unimpaired and free from default. Lender and any Person designated by Lender
shall have, and are hereby granted, the right to enter upon the applicable
Individual Property at any time and from time to time for the purpose of taking
any such action. If the Manager shall deliver to Lender a copy of any notice
sent to Borrower of default under the Management Agreement, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender in good faith, in reliance thereon. Borrower shall not, and shall not
permit the Manager to, sub-contract any or all of its management
responsibilities under the Management Agreement to a third-party without the
prior written consent of Lender, which consent shall not be unreasonably
withheld. Borrower shall, from time to time, obtain from the Manager such
certificates of estoppel with respect to compliance by Borrower with the terms
of the Management Agreement as may be requested by Lender. Borrower shall
exercise each individual option, if any, to extend or renew the term of the
Management Agreement upon demand by Lender made at any time within one (1) year
of the last day upon which any such option may be exercised, and Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to exercise any
such option in the name of and upon behalf of Borrower, which power of attorney
shall be irrevocable and shall be deemed to be coupled with an interest. Any
sums expended by Lender pursuant to this paragraph (i) shall bear interest at
the Default Rate from the date such cost is incurred to the date of payment to
Lender, (ii) shall be deemed to constitute a portion of the Debt, (iii) shall be
secured by the lien of the Security Instruments and the other Loan Documents and
(iv) shall be immediately due and payable upon demand by Lender therefor.
(b) Without limitation of the foregoing, Borrower, upon the request of
Lender, shall terminate the Management Agreement and replace Manager, without
penalty or fee, if at any time during the Loan: (a) Manager shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding, (b) there
exists an Event of Default, (c) there exists a default by Manager under the
Management Agreement that continues beyond the expiration of any applicable
notice and cure periods. At such time as the Manager may be removed, a
Qualifying Manager shall
94
assume management of the applicable Individual Property pursuant to a
Replacement Management Agreement.
SECTION .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. Borrower shall not be responsible for
(i) any set-up fees or any other initial costs relating to or arising under the
Servicing Agreement, and (ii) the monthly servicing fee due to the Servicer
under the Servicing Agreement.
SECTION .7 RESTRUCTURING OF MORTGAGE AND/OR MEZZANINE LOAN.
Lender shall have the right at any time to divide the Loan and/or the
Mezzanine Loan into two or more parts (the "RESTRUCTURING OPTION"): one or more
mortgage loans (the "MORTGAGE LOAN(S)") and/or one or more mezzanine loans (the
"MEZZANINE LOAN(S)"). The principal amount of the Mortgage Loan(s) plus the
principal amount of the Mezzanine Loan(s) shall equal the outstanding principal
balance of the Loan and the Mezzanine Loan immediately prior to the creation of
the Mortgage Loan(s) and the Mezzanine Loan(s). In effectuating the foregoing,
Mezzanine Lender will make a loan to Mezzanine Borrower(s); Mezzanine
Borrower(s) will contribute the amount of the Mezzanine Loan(s) to Borrower (in
its capacity as Borrower under the Mortgage Loan(s), "MORTGAGE BORROWER") and
Mortgage Borrower will apply the contribution to pay down the Loan, without the
payment of the Yield Maintenance Premium or other premium. The Mortgage Loan(s)
and the Mezzanine Loan(s) will be on the same terms and subject to the same
conditions set forth in this Agreement, the Note, the Security Instrument and
the other Loan Documents except as follows:
(a) Lender (in its capacity as the lender under the Mortgage Loan(s),
the "MORTGAGE LENDER") shall have the right to establish different interest
rates and debt service payments for the Mortgage Loan(s) and the Mezzanine
Loan(s) and to require the payment of the Mortgage Loan(s) and the Mezzanine
Loan(s) in such order of priority as may be designated by Lender; provided, that
(i) the total loan amounts for the Mortgage Loan(s) and the Mezzanine Loan(s)
shall equal the amount of the Loan and the Mezzanine Loan immediately prior to
the creation of the Mortgage Loan(s) and the Mezzanine Loan(s); (ii) the initial
weighted average interest rate of the Mortgage Loan(s) and the Mezzanine Loan(s)
shall initially on the date created equal the interest rate which was applicable
to the Loan immediately prior to creation of the Mortgage Loan(s) and the
Mezzanine Loan(s); and (iii) the initial debt service payments on the Mortgage
Loan(s) and the Mezzanine Loan(s) shall initially on the date created equal the
debt service payment which was due under the Loan and the Mezzanine Loan
immediately prior to creation of the Mortgage Loan(s) and the Mezzanine Loan(s).
The Mortgage Loan(s) and the Mezzanine Loan(s) will be made pursuant to Lender's
standard loan documents; provided, however, in the case of the Mortgage Loan(s),
the Mortgage Loan(s) shall be made pursuant to loan documents substantially
similar to the Loan Documents. The Mezzanine Loan(s) will be subordinate to the
Mortgage Loan(s) and will be governed by the terms of an intercreditor agreement
between the holders of the Mortgage Loan(s) and the Mezzanine Loan(s).
95
(b) Mezzanine Borrower(s) shall be a special purpose, bankruptcy
remote entity pursuant to applicable Rating Agency criteria and shall own
directly or indirectly one hundred percent (100%) of Mortgage Borrower. The
direct equity holder(s) of Mezzanine Borrower(s) (such holder(s), the "SECOND
LEVEL SPE(S)") shall be a special purpose, bankruptcy remote entity pursuant to
applicable Rating Agency criteria and shall own directly or indirectly one
hundred percent (100%) of Mezzanine Borrower(s). The security for the Mezzanine
Loan(s) shall be a pledge of one hundred percent (100%) of the direct and
indirect ownership interests held by such Mezzanine Borrower(s).
(c) Mezzanine Borrower(s), Second Level SPE(s) and Mortgage Borrower
shall cooperate with all reasonable requests of Lender in order to divide the
Loan and/or the Mezzanine Loan into one or more Mortgage Loan(s) and one or more
Mezzanine Loan(s) and shall execute and deliver such documents as shall
reasonably be required by Lender and any Rating Agency in connection therewith,
including, without limitation, (i) the delivery of non-consolidation opinions,
(ii) the modification of organizational documents and loan documents, including
, without limitation, this Agreement, (iii) authorize Lender to file any UCC-1
Financing Statements reasonably required by Lender to perfect its security
interest in the collateral pledged as security for the Mortgage Loan(s) and/or
the Mezzanine Loan(s), (iv) execute such other documents reasonably required by
Lender in connection with the creation of the Mortgage Loan(s) and/or the
Mezzanine Loan(s), including, without limitation, a guaranty substantially
similar in form and substance to the Guaranty delivered on the date hereof, an
environmental indemnity substantially similar in form and substance to the
Environmental Indemnity delivered on the date hereof and a conditional
assignment of management agreement substantially similar in form and substance
to the Assignment of Management Agreement delivered on the date hereof, (v)
deliver appropriate authorization, execution and enforceability opinions with
respect to the Mezzanine Loan(s) and the Mortgage Loan(s), and (vi) deliver such
title insurance policies, "Eagle 9" or equivalent UCC title insurance policies,
satisfactory to Lender, insuring the perfection and priority of the lien on the
collateral pledged as security for the Mortgage Loan(s) and/or the Mezzanine
Loan(s).
It shall be an Event of Default hereunder if Borrower, Mezzanine
Borrower(s), Second Level SPE(s) or Sponsor fails to comply with any of the
terms, covenants or conditions of this Section 9.7 after expiration of ten (10)
Business Days after notice thereof.
Solely for the purposes of this Section 9.7, Lender shall reimburse
Borrower for all of its actual out-of-pocket costs and expenses (other than the
fees and expenses of Borrower's counsel) that Borrower incurs in connection with
complying with a request made by Lender under this Section 9.7. Notwithstanding
the foregoing, the provisions of this paragraph shall in no way limit or affect
any Borrower obligation to pay any costs expressly required to be paid by
Borrower pursuant to any other Sections of this Agreement. Lender, without in
any way limiting its other rights hereunder, in its sole and absolute
discretion, shall have the right, at any time prior to a Securitization, to
reallocate the amount of the Loan and the Mezzanine Loan and/or adjust the
interest rate rates thereon provided that (i) the aggregate principal amount of
the Loan and the Mezzanine Loan immediately following such reallocation shall
equal the outstanding principal balance of the Loan and the Mezzanine Loan
immediately prior to such reallocation and (ii) the weighted average interest
rate of the Note and the Mezzanine Note immediately following such reallocation
shall equal the weighted average interest rate which was applicable
96
to the Note and the Mezzanine Note immediately prior to such reallocation.
Borrower shall cooperate with all reasonable requests of Lender in order to
reallocate the amount of the Loan and the Mezzanine Loan and shall execute and
deliver such documents as shall reasonably be required by Lender in connection
therewith, all in form and substance reasonably satisfactory to Lender.
MISCELLANEOUS
SECTION .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 .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 .3 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY
97
INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS AND
THE DETERMINATION OF DEFICIENCY JUDGMENTS, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO
SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CT CORPORATION SYSTEM
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
98
HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
SECTION .4 MODIFICATION, WAIVER IN WRITING.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION .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 .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: ▇▇▇▇▇▇ Brothers Bank, FSB
c/▇ ▇▇▇▇▇▇ Brothers Holdings Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
99
With a copy to: ▇▇▇▇▇▇ Brothers Holdings Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: YSI VI LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 .7 TRIAL BY JURY.
EACH OF BORROWER AND LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER PARTY.
SECTION .8 HEADINGS.
100
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 .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 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 .11 WAIVER OF NOTICE.
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION .12 REMEDIES OF BORROWER.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
SECTION .13 EXPENSES; INDEMNITY.
101
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender within five (5) days of 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 Properties); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (v) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (vi) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the 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 Properties, 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 Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any
cost and expenses due and payable to Lender may be paid from any amounts in the
Lockbox Account.
(b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum
102
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by Lender.
(c) Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless Lender and the Indemnified Parties from and
against any and all losses (including, without limitation, reasonable attorneys'
fees and costs incurred in the investigation, defense, and settlement of losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA, the Code, any State statute or other similar law that may be required, in
Lender's sole discretion) that Lender may incur, directly or indirectly, as a
result of a default under Sections 4.1.9 or 5.2.12 hereof.
(d) Borrower covenants and agrees to pay for or, if Borrower fails to pay,
to reimburse Lender for, (i) any fees and expenses incurred by any Rating Agency
in connection with any Rating Agency review of the Loan, the Loan Documents or
any transaction contemplated thereby or (ii) any consent, approval, waiver or
confirmation obtained from such Rating Agency pursuant to the terms and
conditions of this Agreement or any other Loan Document and Lender shall be
entitled to require payment of such fees and expenses as a condition precedent
to the obtaining of any such consent, approval, waiver or confirmation.
SECTION .14 SCHEDULES INCORPORATED.
The Schedules and Exhibits attached hereto are hereby incorporated
herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
SECTION .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 .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 Properties 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
103
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
SECTION .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, ▇▇▇▇▇▇, or any of their Affiliates shall be subject to the prior written
approval of Lender, which shall not be unreasonably withheld. Notwithstanding
the foregoing, disclosure required by any Federal or State securities laws,
rules or regulations, as determined by Borrower's counsel, shall not be subject
to the prior written approval of Lender.
SECTION .18 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF MARSHALLING
OF ASSETS.
(a) Borrower acknowledges that Lender has made the Loan to Borrower upon
the security of its collective interest in the Properties and in reliance upon
the aggregate of the Properties taken together being of greater value as
collateral security than the sum of each Individual Property taken separately.
Borrower agrees that the Security Instruments are and will be
cross-collateralized and cross-defaulted with each other so that (i) an Event of
Default under any of the Security Instruments shall constitute an Event of
Default under each of the other Security Instruments which secure the Note; (ii)
an Event of Default under the Note or this Agreement shall constitute an Event
of Default under each Security Instrument; and (iii) each Security Instrument
shall constitute security for the Note as if a single blanket lien were placed
on all of the Properties as security for the Note.
(b) 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, Guarantor
and of the Properties, or to a sale in inverse order of alienation in the event
of foreclosure of all or any of the Security Instruments, 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 Properties
or any other assets of Borrower or Guarantor 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 Properties or any
other assets of Borrower or Guarantor in preference to every other claimant
whatsoever. In addition, Borrower, for itself and its successors and assigns,
waives in the event of foreclosure of any or all of the Security Instruments,
any equitable right otherwise available to Borrower which would require the
separate sale of the Properties or any other assets of Borrower or Guarantor or
require Lender to exhaust its remedies against any Individual Property or any
combination of the Properties or any other assets of Borrower or Guarantor
before proceeding against any other Individual Property or combination of
Properties
104
or any other assets of Borrower or Guarantor; and further in the event of such
foreclosure Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Properties or any other assets of Borrower or Guarantor.
SECTION .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 .20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
SECTION .21 BROKERS AND FINANCIAL ADVISORS.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein. The provisions of this Section 10.21
shall survive the expiration and termination of this Agreement and the payment
of the Debt.
SECTION .22 PRIOR AGREEMENTS.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, between Borrower and/or its Affiliates and
Lender are superseded by the terms of this Agreement and the other Loan
Documents.
105
[NO FURTHER TEXT ON THIS PAGE]
106
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:
YSI VI LLC, a Delaware limited liability
company
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Operating Officer
LENDER:
▇▇▇▇▇▇ BROTHERS BANK, FSB, a federal
stock savings bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE I
PROPERTIES - ALLOCATED LOAN AMOUNTS
PROPERTY ALLOCATED LOAN AMOUNT
-------- ---------------------
1. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $2,930,000
Lancaster, California
2. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $3,339,000
Apple Valley, California
3. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ $4,974,000
San Bernardino, California
4. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ $3,271,000
Monroe, Connecticut
5. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $4,020,000
Stamford, Connecticut
6. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ $3,339,000
Bristol (Hartford), Connecticut
7. ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ $1,533,000
Manchester, Connecticut
8. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ $2,215,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ $1,704,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇-▇ ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ $5,656,000
Old Saybrook, Connecticut
11. ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ $1,670,000
Old Saybrook, Connecticut
12. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $5,179,000
Naples, Florida
13. ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ $5,111,000
Miami, Florida
14. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ $5,111,000
Stuart, Florida
PROPERTY ALLOCATED LOAN AMOUNT
-------- ---------------------
15. ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ $4,055,000
Orlando, Florida
16. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $4,770,000
Boynton Beach, Florida
17. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $2,964,000
Bellwood, Illinois
18. 26 W. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇,▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
19. ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ $2,249,000
West Chicago, Illinois
20. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
21. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ $2,112,000
Gulfport, Mississippi
22. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇,▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
23. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ $1,635,000
Dayton, Ohio
24. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ $3,203,000
Memphis, Tennessee
2
SCHEDULE II
O&M PROGRAM PROPERTIES
1. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
2. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
3. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (Hartford), Connecticut
4. ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
5. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
6. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
7. ▇▇▇-▇ ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
8. ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
9. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
10. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
11. ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
12. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
13. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
14. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
15. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
SCHEDULE 4.1.1
ORGANIZATIONAL CHART (SEE FOLLOWING PAGES)
SCHEDULE 4.1.4
LITIGATION
NONE
SCHEDULE 4.1.5
MATERIAL AGREEMENTS
1. Property Management Agreement, dated July ____, 2005, between YSI
Management LLC, a Delaware limited liability company and YSI VI LLC, a
Delaware limited liability company
2. Marketing and Ancillary Services Agreement, dated July ____, 2005, between
U-Store-It Mini Warehouse Co., an Ohio corporation and YSI VI LLC, a
Delaware limited liability company
3. Trademark License Agreement, dated July ____, 2005, between U-Store-It Mini
Warehouse Co., an Ohio corporation and YSI VI LLC, a Delaware limited
liability company
SCHEDULE 4.1.26
MAJOR LEASES
NONE
SCHEDULE 4.1.30
NON-CONSOLIDATION OPINION (SEE FOLLOWING PAGES)
SCHEDULE 4.1.31
PROPERTIES NOT OPERATED AS A U-STORE-IT FACILITY
NONE
SCHEDULE 7.1.1
REQUIRED REPAIRS (SEE FOLLOWING PAGES)
SCHEDULE 7.3.2
REPLACEMENT RESERVES (SEE FOLLOWING PAGES)
NOT APPLICABLE