EXHIBIT 10.6
LOAN AGREEMENT
Dated as of June 4, 2002
between
GRAND CANAL SHOPS II, LLC,
as Borrower,
and
ARCHON FINANCIAL, L.P.,
as Lender
TABLE OF CONTENTS
Page
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DEFINITIONS....................................................................................1
ARTICLE I
GENERAL TERMS
Section 1.1. The Loan.........................................................................25
Section 1.2. The Term.........................................................................25
Section 1.3. Interest and Principal...........................................................25
Section 1.4. Interest Rate Cap Agreements.....................................................27
Section 1.5. Method and Place of Payment......................................................27
Section 1.6. Regulatory Change................................................................27
Section 1.7. Taxes............................................................................28
Section 1.8. Release..........................................................................29
ARTICLE II
VOLUNTARY PREPAYMENT
Section 2.1. Voluntary Prepayment.............................................................29
ARTICLE III
ACCOUNTS
Section 3.1. Cash Management Account..........................................................30
Section 3.2. Distributions from Cash Management Account.......................................31
Section 3.3. Cash Trap Account................................................................32
Section 3.4. Tax and Insurance Escrow Account.................................................33
Section 3.5. TI/LC Reserve Account............................................................34
Section 3.6. Capital Reserve Account..........................................................35
Section 3.7. [Reserved].......................................................................36
Section 3.8. Loss Proceeds Account............................................................36
Section 3.9. [Reserved].......................................................................36
Section 3.10. Account Collateral.............................................................37
Section 3.11. Permitted Investments..........................................................37
Section 3.12. Bankruptcy.....................................................................38
ARTICLE IV
REPRESENTATIONS
Section 4.1. Organization.....................................................................38
Section 4.2. Authorization....................................................................38
Section 4.3. No Conflicts.....................................................................39
Section 4.4. Consents.........................................................................39
Section 4.5. Enforceable Obligations..........................................................39
Section 4.6. No Default.......................................................................39
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Section 4.7. Payment of Taxes.................................................................39
Section 4.8. Compliance with Law..............................................................39
Section 4.9. ERISA............................................................................40
Section 4.10. Government Regulation..........................................................40
Section 4.11. No Bankruptcy Filing...........................................................40
Section 4.12. Other Debt.....................................................................40
Section 4.13. Litigation.....................................................................40
Section 4.14. Leases; Material Agreements....................................................40
Section 4.15. [Reserved].....................................................................41
Section 4.16. Financial Condition............................................................41
Section 4.17. Single-Purpose Requirements....................................................41
Section 4.18. Location of Chief Executive Offices............................................42
Section 4.19. Not Foreign Person.............................................................42
Section 4.20. Labor Matters..................................................................42
Section 4.21. Title..........................................................................42
Section 4.22. No Encroachments...............................................................42
Section 4.23. Physical Condition.............................................................42
Section 4.24. Fraudulent Conveyance..........................................................43
Section 4.25. Management.....................................................................43
Section 4.26. Condemnation...................................................................43
Section 4.27. Utilities and Public Access....................................................43
Section 4.28. Environmental Matters..........................................................44
Section 4.29. Assessments....................................................................44
Section 4.30. No Joint Assessment............................................................45
Section 4.31. Separate Lots..................................................................45
Section 4.32. Permits; Certificate of Occupancy..............................................45
Section 4.33. Flood Zone.....................................................................45
Section 4.34. Security Deposits..............................................................45
Section 4.35. Certain Agreements.............................................................45
Section 4.36. Insurance......................................................................45
Section 4.37. Master Leases..................................................................45
Section 4.38. Survival.......................................................................47
Section 4.39. Affiliate Transactions.........................................................47
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Existence........................................................................47
Section 5.2. Maintenance of Property; Compliance with Legal Requirements......................47
Section 5.3. Impositions and Other Claims.....................................................48
Section 5.4. Access to Property...............................................................48
Section 5.5. Notice of Default................................................................48
Section 5.6. Litigation.......................................................................48
Section 5.7. Cooperate in Legal Proceedings...................................................48
Section 5.8. Leases...........................................................................49
Section 5.9. Plan Assets, etc.................................................................51
Section 5.10. Further Assurances.............................................................51
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Section 5.11. Management of Collateral.......................................................52
Section 5.12. Annual Financial Statements....................................................52
Section 5.13. Quarterly Financial Statements.................................................53
Section 5.14. Monthly Financial Statements...................................................53
Section 5.15. Insurance......................................................................54
Section 5.16. Casualty and Condemnation......................................................58
Section 5.17. Annual Budget..................................................................60
Section 5.18. General Indemnity..............................................................60
Section 5.19. Covenants with respect to the REA and the ESA..................................60
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Liens on the Property............................................................61
Section 6.2. Ownership........................................................................61
Section 6.3. Transfer.........................................................................61
Section 6.4. Debt.............................................................................61
Section 6.5. Dissolution; Merger or Consolidation.............................................61
Section 6.6. Change In Business...............................................................61
Section 6.7. Debt Cancellation................................................................62
Section 6.8. Affiliate Transactions...........................................................62
Section 6.9. Misapplication of Funds..........................................................62
Section 6.10. Place of Business..............................................................62
Section 6.11. Modifications and Waivers......................................................62
Section 6.12. ERISA..........................................................................62
Section 6.13. Alterations and Expansions.....................................................63
Section 6.14. Advances and Investments.......................................................63
Section 6.15. Single-Purpose Entity..........................................................63
Section 6.16. Zoning and Uses................................................................63
Section 6.17. Waste..........................................................................64
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default.................................................................64
Section 7.2. Remedies.........................................................................66
Section 7.3. No Waiver........................................................................67
Section 7.4. Application of Payments During Continuance of an Event of Default................68
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1. Conditions Precedent to Closing..................................................68
ARTICLE IX
MISCELLANEOUS
Section 9.1. Successors.......................................................................71
Section 9.2. GOVERNING LAW....................................................................71
Section 9.3. Modification, Waiver in Writing..................................................71
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Section 9.4. Notices..........................................................................71
Section 9.5. TRIAL BY JURY....................................................................73
Section 9.6. Headings.........................................................................73
Section 9.7. Assignment and Participation.....................................................73
Section 9.8. Severability.....................................................................75
Section 9.9. Preferences......................................................................75
Section 9.10. Remedies of Borrower...........................................................75
Section 9.11. Offsets, Counterclaims and Defenses............................................75
Section 9.12. No Joint Venture...............................................................75
Section 9.13. Conflict; Construction of Documents............................................76
Section 9.14. Brokers and Financial Advisors.................................................76
Section 9.15. Counterparts...................................................................76
Section 9.16. Estoppel Certificates..........................................................76
Section 9.17. Payment of Expenses; Mortgage Recording Taxes..................................76
Section 9.18. No Third-Party Beneficiaries...................................................77
Section 9.19. Recourse.......................................................................77
Section 9.20. Right of Set-Off...............................................................79
Section 9.21. Exculpation of Lender..........................................................79
Section 9.22. Servicer.......................................................................80
Section 9.23. Prior Agreements...............................................................80
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EXHIBITS
A Form of Tenant Notice
B Form of Cash Management Agreement
C-1 Form of
New York Opinion
C-2 Form of Local Counsel Opinion
C-3 Form of Nonconsolidation Opinion
D Standard Lease Forms
E Form of SNDA
SCHEDULES
A Property
B Exception Report
C [Reserved]
D [Reserved]
E Rent Roll
F Material Agreements
G Cap Agreement Requirements
H-1 Permitted Expansion Space
H-2 Permitted Expansion Financing Conditions
I Master Leases
J Prohibited Transferees
K Tenants under Material Leases in Effect as of the Closing Date
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LOAN AGREEMENT
This
Loan Agreement (this "AGREEMENT") is dated June 4, 2002 and is
between ARCHON FINANCIAL, L.P., a Delaware limited partnership, as a lender
(together with its successors and permitted assigns as holder of the Loan,
"LENDER"), and GRAND CANAL SHOPS II, LLC, a Delaware limited liability company,
as borrower (together with its permitted successors and assigns, "BORROWER").
RECITALS
Borrower desires to obtain from Lender the Loan (as hereinafter
defined) in connection with the refinancing of the property known as The Grand
Canal Shoppes, Las Vegas, Nevada.
Lender is willing to make the Loan on the terms and conditions set
forth in this Agreement if Borrower joins in the execution and delivery of this
Agreement, issues the Note and executes and delivers the other Loan Documents.
Lender and Borrower therefore agree as follows:
DEFINITIONS
(a) When used in this Agreement, the following capitalized terms
have the following meanings:
"ACCEPTABLE COUNTERPARTY" means any counterparty to an Interest Rate
Cap Agreement that has and maintains either a long-term unsecured debt rating of
AAA by S&P or a short-term unsecured debt rating of not less than A-1+ by S&P
and a long-term unsecured debt rating of not less than Aa3 by ▇▇▇▇▇'▇, or any
other counterparty to an Interest Rate Cap Agreement with respect to which
Rating Confirmation is received.
"ACCOUNT COLLATERAL" means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities, but excluding
Excess Cash Flow.
"ACTUAL NOI" means, as of any date of determination, annualized Net
Operating Income for the Property for the most recently ended Test Period
(determined by multiplying Net Operating Income for such Test Period by two).
"AFFILIATE" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this definition, "CONTROL" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests (determined in a manner analogous to
the method for determining beneficial ownership under Rule 13d-3 under the
Securities Exchange Act of
1934, as amended), by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGREEMENT" means this
Loan Agreement, as the same may from time to
time hereafter be modified or replaced.
"ALTA" means the American Land Title Association, or any successor
thereto.
"ALTERATION" means any demolition, alteration, installation,
improvement or expansion of or to the Property or any portion thereof, other
than Tenant Improvements required under Leases.
"ANNUAL BUDGET" means a capital and operating expenditure budget for
the Property prepared by Borrower and specifying amounts sufficient to operate
and maintain the Property at a standard at least equal to that maintained on the
Closing Date.
"APPRAISAL" means an as-is appraisal of the Property that is prepared
by a member of the Appraisal Institute selected by the Borrower (and reasonably
approved by Lender), meets the minimum appraisal standards for national banks
promulgated by the Comptroller of the Currency pursuant to Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended
(FIRREA) and complies with the Uniform Standards of Professional Appraisal
Practice (USPAP).
"APPROVED ANNUAL BUDGET" has the meaning set forth in SECTION 5.17.
"APPROVED MANAGEMENT AGREEMENT" means the Property Management
Agreement, dated as of July 24, 1997, between Borrower and Forest City
Commercial Management, Inc., as such agreement may be modified or replaced in
accordance herewith, and any other management agreement with respect to which
Lender receives Rating Confirmation and which provides that it may be terminated
by Borrower without fee or penalty on not less than 30 days' prior written
notice; PROVIDED that if Borrower or any Affiliate of Borrower manages the
Property, then no separate written management agreement shall be required
hereunder (PROVIDED further that any such management arrangements shall be in
accordance with SECTION 6.8)
"APPROVED PROPERTY MANAGER" means (i) Forest City Commercial
Management, Inc., (ii) Borrower or any Affiliate of Borrower, or (iii) any other
management company with respect to which Lender receives Rating Confirmation, in
each case unless and until Lender requests the termination of such management
company during the continuance of an Event of Default pursuant to SECTION
5.11(d).
"ASSIGNMENT" has the meaning set forth in SECTION 9.7(b).
"ASSIGNMENT OF INTEREST RATE CAP AGREEMENT" means each collateral
assignment of an interest rate cap agreement executed by Borrower in accordance
herewith, each of which must be in the form executed by Borrower on the Closing
Date, as the same may from time to time be modified or replaced in accordance
herewith.
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"ASSIGNMENT OF RENTS AND LEASES" means the assignment of rents and
leases executed by Borrower on the Closing Date, as the same may from time to
time be modified or replaced in accordance herewith.
"BANKRUPTCY CODE" has the meaning set forth in SECTION 7.1(d).
"BORROWER" has the meaning set forth in the first paragraph of this
agreement.
"BORROWER MANAGING MEMBER" means Grand Canal Shops Mall MM Subsidiary,
Inc., a Nevada corporation.
"BUDGETED ANNUAL CAPITAL EXPENDITURE AMOUNT" means, with respect to
any Fiscal Year, (i) the aggregate anticipated cost of Capital Expenditures for
such Fiscal Year as set forth in the Approved Annual Budget, or (ii) such
greater amount as shall equal the actual cost of Borrower's Capital Expenditures
for such Fiscal Year; PROVIDED that such greater amount may in no event exceed
105% of the amount specified in clause (i), with no individual budget line item
exceeding 110% of the amount set forth in the Approved Annual Budget with
respect to such line item, in each case without the prior written consent of
Lender, not to be unreasonably withheld or delayed, PROVIDED, HOWEVER, that no
such limitation shall apply, nor shall Lender's consent be required, in respect
of any Non-Discretionary Items.
"BUDGETED ANNUAL OPERATING EXPENSE AMOUNT" means, with respect to any
Fiscal Year, (i) the aggregate anticipated cost of Operating Expenses for such
Fiscal Year as set forth in the Approved Annual Budget, or (ii) such greater
amount as shall equal the actual cost of Borrower's Operating Expenses for such
Fiscal Year; PROVIDED that such greater amount may in no event exceed 105% of
the amount specified in clause (i), with no individual budget line item
exceeding 110% of the amount set forth in the Approved Annual Budget with
respect to such line item, in each case without the prior written consent of
Lender, not to be unreasonably withheld or delayed, PROVIDED, HOWEVER, that no
such limitation shall apply, nor shall Lender's consent be required, in respect
of any Non-Discretionary Items.
"BUSINESS DAY" means any day other than (i) a Saturday and a Sunday
and (ii) a day on which federally insured depository institutions in the State
of
New York or the state in which the offices of Lender, its trustee, its
Servicer or its Servicer's collection account are located are authorized or
obligated by law, governmental decree or executive order to be closed (Lender
agrees to provide reasonably prompt notice to Borrower of any change in the
determination of a Business Day based on the criteria set forth in clause (ii)
above). When used with respect to an Interest Determination Date, "BUSINESS DAY"
shall mean a day on which banks are open for dealing in foreign currency and
exchange in London.
"CAPITAL EXPENDITURE" means hard and soft costs incurred by Borrower
with respect to replacements and capital repairs made to the Property (including
repairs to, and replacements of, structural components, roofs, building systems,
parking garages and parking lots), in each case to the extent capitalized in
accordance with GAAP.
"CAPITAL RESERVE ACCOUNT" has the meaning set forth in SECTION 3.6.
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 3.1(a).
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"CASH MANAGEMENT AGREEMENT" means a cash management agreement in
substantially the form of EXHIBIT B, as the same may from time to time be
modified or replaced in accordance herewith.
"CASH MANAGEMENT BANK" means ▇▇▇▇▇ Fargo Bank, N.A., or any other
depository institution selected by Borrower (and reasonably satisfactory to
Lender) or Lender from time to time in which Eligible Accounts may be
maintained.
"CASH TRAP PERIOD" means any period (i) during the continuance of an
Event of Default, (ii) from (a) the conclusion of any Test Period for which
Actual NOI is less than 75% of Closing Date NOI, to (b) the conclusion of any
two consecutive Fiscal Quarters thereafter for which Actual NOI is equal to or
greater than 75% of Closing Date NOI and (iii) from and after the occurrence of
a Terrorism Event until the first to occur of (a) the Payment Date following the
one-year anniversary of such event and (b) the conclusion of any Test Period
following such event as to which Actual NOI is equal to or greater than Closing
Date NOI.
"CASH TRAP ACCOUNT" has the meaning set forth in SECTION 3.3(a).
"CASUALTY" means a fire, explosion, flood, collapse, earthquake or
other casualty affecting all or any portion of the Property.
"CERTIFICATES" means, collectively, any senior and/or subordinate
notes, debentures or pass-through certificates, or other evidence of
indebtedness, or debt or equity securities, or any combination of the foregoing,
representing a direct or beneficial interest, in whole or in part, in the Loan.
"CHANGE OF CONTROL" means (i) Borrower's ceasing to be Controlled by
one or more Qualified Equityholders (individually or collectively), or (ii) a
pledge of any direct or indirect equity interest in Borrower, the foreclosure on
which would result in a Change of Control under clause (i).
"CLOSING DATE" means the date of this Agreement.
"CLOSING DATE DSCR" means 1.98x.
"CLOSING DATE NOI" means $19,236,331.
"CODE" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"COLLATERAL" means all assets owned from time to time by Borrower
including the Property, the Revenues and all other tangible and intangible
property in respect of which Lender is granted a Lien under the Loan Documents,
and all proceeds thereof.
"COLLATERAL ACCOUNTS" means, collectively, the Cash Management
Account, the Cash Trap Account, the Tax and Insurance Escrow Account, the TI/LC
Reserve Account, the Loss Proceeds Account and the Capital Reserve Account.
4
"COMMERCIALLY REASONABLE" means, with respect to the terms and
conditions of any proposed Lease (other than rent and other amounts payable
thereunder), commercially reasonable when compared with terms and conditions of
Leases in similarly situated malls in similar contexts at the time in question,
taking into account, INTER ALIA, the size, creditworthiness and bargaining power
of a prospective Tenant, the location and size of the space covered by such
proposed Lease and the rent and other amounts payable thereunder.
"COMPONENT BALANCE" has the meaning set forth in SECTION 1.3(c).
"COMPONENT SPREAD" has the meaning set forth in SECTION 1.3(c).
"COMPONENTIZATION NOTICE" has the meaning set forth in SECTION 1.3(c).
"CONDEMNATION" means a taking or voluntary conveyance of all or part
of the Property or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority.
"CONTINGENT OBLIGATION" means any obligation of Borrower directly or
indirectly guaranteeing any Debt of any other Person in any manner.
"CONTROL" of any entity means the ownership, directly or indirectly,
of at least 51% of the equity interests in, and the right to at least 51% of the
distributions from, such entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
entity, whether through the ability to exercise voting power, by contract or
otherwise ("CONTROLLED" has the meaning correlative thereto).
"CONVENTION CENTER" means the Sands Exposition and Convention Center
located in Las Vegas, Nevada.
"COOPERATION AGREEMENT" means the Mortgage Loan Cooperation
Agreement, dated as of the Closing Date, among Borrower, Lender and Sponsor, as
the same may from time to time be modified or replaced in accordance herewith.
"DAMAGES" to a party means any and all liabilities, obligations,
losses, damages, penalties, assessments, actions, judgments, suits, claims,
costs, expenses (including reasonable attorneys' fees whether or not suit is
brought), settlement costs and disbursements imposed on, incurred by or asserted
against such party, other than consequential or indirect losses or damages.
"DEBT" means, with respect to any Person, without duplication:
(i) all indebtedness of such Person to any other party (regardless
of whether such indebtedness is evidenced by a written instrument such as a
note, bond or debenture) for borrowed money or for the deferred purchase
price of property or services;
(ii) all letters of credit issued for the account of such Person
and all unreimbursed amounts drawn thereunder;
5
(iii) all indebtedness secured by a Lien on any property owned by
such Person (whether or not such indebtedness has been assumed) except
obligations for impositions which are not yet due and payable;
(iv) all Contingent Obligations of such Person;
(v) all payment obligations of such Person under any interest rate
protection agreement (including any interest rate swaps, floors, collars or
similar agreements) and similar agreements;
(vi) all contractual indemnity obligations of such Person; and
(vii) any material actual or contingent liability to any Person or
Governmental Authority with respect to any employee benefit plan (within
the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA, Section
302 of ERISA or Section 412 of the Code.
"DEED OF TRUST" means the deed of trust of the Property executed by
Borrower on the Closing Date, as the same may from time to time be modified or
replaced in accordance herewith.
"DEEMED CASH TRAP PERIOD" means, in connection with the termination of
any Lease and as of any date of determination, a Cash Trap Period that would
have occurred as of the most recently ended Test Period after giving pro-forma
effect to (x) the termination of such Lease, (y) the portion of any Termination
Fee amortized over such period in accordance with the terms hereof, and (z) any
replacement Lease(s) executed at or prior to such date of determination. In
determining whether a Deemed Cash Trap Period has terminated, at any time
Borrower may deliver to Lender any replacement Lease(s) and such other
information as Lender may reasonably request, and upon receipt of such
materials, Lender shall reasonably promptly thereafter recalculate Actual NOI
(giving pro-forma effect to such replacement Leases(s) as if they had been in
effect during the most recently-ended Test Period) as of the most recently ended
Test Period to determine if such Deemed Cash Trap Period has terminated.
"DEFAULT" means the occurrence of any event which, but for the giving
of notice or the passage of time, or both, would be an Event of Default.
"DEFAULT RATE" means, with respect to any Note or Note Components, the
greater of (x) 4% per annum in excess of the interest rate otherwise applicable
to such Note or Note Component hereunder and (y) 1% per annum in excess of the
Prime Rate from time to time.
"DSCR TEST" means a test that will be satisfied in connection with a
Permitted Expansion Financing if the quotient of (i) Actual NOI for the Property
and the Expansion Space for the most recently-ended Test Period divided by (ii)
the product of (x) the aggregate outstanding principal balance of the Loan and
such Permitted Expansion Financing as of the last day of such Test Period TIMES
(y) 9.25%, is no less than Closing Date DSCR.
"EASEMENT AREAS" has the meaning set forth in SECTION 4.27.
6
"ELIGIBLE ACCOUNT" means (i) a segregated account maintained with a
federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution, or (ii) a segregated trust
account or accounts maintained with the corporate trust department of a federal
depository institution or state-chartered depository institution which has an
investment-grade rating and is subject to regulations regarding fiduciary funds
on deposit under, or similar to, Title 12 of the Code of Federal Regulations
Section 9.10(b) which, in either case, has corporate trust powers, acting in its
fiduciary capacity.
"ELIGIBLE INSTITUTION" means an institution (i) whose commercial
paper, short-term debt obligations or other short-term deposits are rated at
least ▇-▇, ▇▇▇▇▇-▇ or F-1, as applicable, by each of the Rating Agencies (or, in
the case of The Bank of Nova Scotia, maintain at least its ratings as in effect
on the date hereof) and whose long-term senior unsecured debt obligations are
rated at least AA- or Aa2, as applicable, by each of the Rating Agencies (or, in
the case of The Bank of Nova Scotia, maintain at least its ratings as in effect
on the date hereof), and whose deposits are insured by the FDIC or (ii) with
respect to which Lender shall have received Rating Confirmation.
"ENGINEERING REPORT" means a structural and engineering report or
reports with respect to the Property prepared by an independent engineer
reasonably approved by Lender and delivered to Lender in connection with the
Loan, and any amendments or supplements thereto delivered to Lender.
"ENVIRONMENTAL CLAIM" means any written notice, claim, proceeding,
investigation or demand by any Person or Governmental Authority alleging or
asserting liability with respect to Borrower or the Property arising out of,
based on or resulting from (i) the alleged presence, Use or Release of any
Hazardous Substance, (ii) any alleged violation of any Environmental Law, or
(iii) any alleged injury or threat of injury to property, health or safety or to
the environment caused by Hazardous Substances.
"ENVIRONMENTAL INDEMNITY" the environmental indemnity agreement
executed by Borrower and the Sponsor on the Closing Date, as the same may from
time to time be modified or replaced in accordance herewith.
"ENVIRONMENTAL LAWS" means any and all present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, any binding judicial or administrative orders, decrees or
judgments thereunder, and any permits, approvals, licenses, registrations,
filings and authorizations, in each case as now or hereafter in effect, relating
to the pollution, protection or cleanup of the environment, relating to the
impact of Hazardous Substances on property, health or safety, or the Use or
Release of Hazardous Substances, or relating to the liability for or costs of
other actual or threatened danger to health or the environment. The term
"ENVIRONMENTAL LAW" includes, but is not limited to, the following statutes, as
amended, any successors thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Clean Water Act; the Clean Air Act; the
7
Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
The term "ENVIRONMENTAL LAW" also includes, but is not limited to, any present
and future federal state and local laws, statutes ordinances, rules, regulations
and the like, as well as common law, conditioning transfer of property upon a
negative declaration or other approval of a Governmental Authority of the
environmental condition of a property; or requiring notification or disclosure
of Releases of Hazardous Substances or other environmental conditions of a
property to any Governmental Authority or other Person, whether or not in
connection with transfer of title to or interest in property.
"ENVIRONMENTAL REPORTS" means a "Phase I Environmental Site
Assessment" as referred to in the ASTM Standards on Environmental Site
Assessments for Commercial Real Estate, E 1527-94 (and, if necessary, a "Phase
II Environmental Site Assessment"), prepared by an independent environmental
auditor reasonably approved by Lender and any amendments or supplements thereto,
and shall also include any other environmental reports delivered to Lender
pursuant to this Agreement and the Environmental Indemnity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA AFFILIATE," at any time, means each trade or business (whether
or not incorporated) that would, at the time, be treated together with Borrower
as a single employer under Title IV or Section 302 of ERISA or Section 412 of
the Code.
"ESA" means that certain Energy Services Agreement dated as of
November 14, 1997 between Borrower and Atlantic-Pacific Las Vegas, LLC, as
amended by that certain Energy Services Agreement Amendment No. 1 dated as of
July 1, 1999, as the same may be further amended from time to time.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 7.1.
"EVENT OF DEFAULT YIELD MAINTENANCE PREMIUM" shall mean, with respect
to any payment of principal (or any portion thereof) occurring after an
acceleration of the Loan (unless such acceleration shall have theretofore been
waived in writing by Lender in its sole discretion), the greater of (x) 2% of
the amount prepaid and (y) the product of:
(A) a fraction whose numerator is the amount so paid and whose
denominator is the outstanding principal balance of the Loan before giving
effect to such payment, TIMES
(B) the excess of (1) the sum of the respective present values,
computed as of the date of such prepayment, of the remaining scheduled
payments of principal and interest with respect to the Loan (assuming a
constant LIBOR rate equal to the LIBOR Strike Rate and assuming no
prepayments or acceleration of the Loan), determined by discounting such
payments to the date on which such payments are made at the Treasury
Constant Yield, over (2) the outstanding principal balance of the Loan on
such date immediately prior to such payment.
8
The calculation of the Event of Default Yield Maintenance Premium
shall be made by Lender and shall, absent manifest error, be final, conclusive
and binding upon all parties.
"EXCEPTION REPORT" means the report prepared by Borrower and attached
hereto as SCHEDULE B, setting forth any exceptions to the representations set
forth in ARTICLE IV.
"EXCESS CASH FLOW" has the meaning set forth in SECTION 3.2(b).
"EXTENSION INTEREST RATE CAP AGREEMENT " means an interest rate cap
agreement (together with the confirmation and schedules relating thereto)
between the applicable Acceptable Counterparty and Borrower, relating to the
applicable Extension Term, satisfying the requirements set forth in SCHEDULE G.
"EXTENSION TERM" has the meaning set forth in SECTION 1.2(b).
"FISCAL QUARTER" means the three-month period ending on March 31, June
30, September 30 and December 31 of each year, or such other fiscal quarter of
Borrower as Borrower may select from time to time with the prior consent of
Lender, such consent not to be unreasonably withheld.
"FISCAL YEAR" means the 12-month period ending on December 31 of each
year, or such other fiscal year of Borrower as Borrower may select from time to
time with the prior consent of Lender, not to be unreasonably withheld.
"FITCH" means Fitch, Inc. and its successors.
"FORM W-8BEN" means Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding) of the Department of
Treasury of the United States of America, and any successor form.
"FORM W-8ECI" means Form W-8ECI (Certificate of Foreign Person's Claim
for Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America, and any successor form.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, regional,
local or municipal government, any bureau, department, agency or political
subdivision thereof and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any court).
"GSMC" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company.
"HAZARDOUS SUBSTANCES" means any and all substances (whether solid,
liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous
wastes, hazardous
9
substances, hazardous materials, extremely hazardous wastes, toxic substances,
toxic pollutants, contaminants, pollutants or words of similar meaning or
regulatory effect under any present or future Environmental Laws or that may
have a negative impact on human health or the environment or the presence of
which on, in or under the Property is prohibited under Environmental Law,
including but not limited to petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead and radon, and
compounds containing them (including gasoline, diesel fuel, oil and lead-based
paint), and radioactive materials, flammables and explosives and compounds
containing them.
"HOTEL/CASINO" means the Venetian Hotel & Casino located in Las Vegas,
Nevada.
"INCREASED COSTS" has the meaning set forth in SECTION 1.6.
"INDEBTEDNESS" means the Principal Indebtedness, together with
interest and all other obligations and liabilities of Borrower to Lender under
the Loan Documents, including all Transaction Costs, any Event of Default Yield
Maintenance Premium, any Make-Whole Payment and other amounts due or to become
due to Lender pursuant hereto, under the Note or in accordance with any of the
other Loan Documents, and all other amounts, sums and expenses reimbursable by
Borrower to Lender hereunder or pursuant to the Note or any of the other Loan
Documents.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
9.19(b).
"INDEMNIFIED PARTIES" has the meaning set forth in SECTION 5.18.
"INDEPENDENT DIRECTOR" of a limited liability company or a corporation
means an individual who is duly appointed as a member of the board of managers
or directors, as the case may be, of such limited liability company or
corporation, as the case may be, and who is not, and has never been, and will
not while serving as Independent Director, be any of the following:
(i) a member, partner, equityholder, manager, director, officer or
employee of Borrower or its equityholders or Affiliates (other than as an
independent director or manager of an Affiliate of Borrower that is
required by a creditor to be a single purpose bankruptcy remote entity);
(ii) a creditor, supplier or service provider (including provider
of professional services) to Borrower or any of its equityholders or
Affiliates (other than a company that provides professional independent
managers or directors and which also provides lien search and other similar
services to Borrower or any of its equityholders or Affiliates in the
ordinary course of business);
(iii) a family member of any such member, partner, equityholder,
manager, director, officer, employee, creditor, supplier or service
provider; or
(iv) a Person that controls (whether directly, indirectly or
otherwise) any of (i), (ii) or (iii) above.
10
"INITIAL INTEREST RATE CAP AGREEMENT" means an interest rate cap
agreement (together with the confirmation and schedules relating thereto)
between the applicable Acceptable Counterparty and Borrower, relating to the
initial term of the Loan, satisfying the requirements set forth in SCHEDULE G.
"INITIAL PAYMENT DATE" means the Payment Date in July, 2002.
"INSURANCE REQUIREMENTS" means, collectively, (i) all material terms
of any insurance policy required pursuant to this Agreement and (ii) all
material regulations and then-current standards applicable to or affecting the
Property or any portion thereof or any use or condition thereof, which may, at
any time, be recommended by the board of fire underwriters, if any, having
jurisdiction over the Property, or any other body exercising similar functions.
"INTEREST ACCRUAL PERIOD" means, with respect to any specified Payment
Date, the period from and including the 15th day of the calendar month preceding
such Payment Date to but excluding the 15th day of the calendar month containing
such specified Payment Date (or, if either such 15th day is not a Business Day,
the Interest Accrual Period shall be based upon the immediately succeeding
Business Day). Notwithstanding the foregoing, the first Interest Accrual Period
shall commence on the Closing Date and end on June 16, 2002.
"INTEREST DETERMINATION DATE" means, in connection with the
calculation of interest accrued for any Interest Accrual Period, the second
Business Day preceding the first day of such Interest Accrual Period.
"INTEREST RATE CAP AGREEMENTS" means collectively, the Initial
Interest Rate Cap Agreement and the Extension Interest Rate Cap Agreements.
"LEASE" means any lease, license, letting, concession, occupancy
agreement, sublease to which Borrower is a party or has a consent right, or
other agreement (whether written or oral and whether now or hereafter in effect)
under which Borrower is a lessor, existing as of the Closing Date or hereafter
entered into by Borrower, in each case pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of any
space in the Property, and every modification or amendment thereof, 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 COMMISSIONS " means leasing commissions required to be paid
by Borrower in connection with the leasing of space to Tenants at the Property
pursuant to Leases entered into by Borrower in accordance herewith and payable
in accordance with third-party/arm's-length brokerage agreements or agreements
with an Affiliate of Borrower, PROVIDED that, in the case of any agreement with
an Affiliate of Borrower, the commissions payable pursuant thereto are
commercially reasonable based upon the then current brokerage market for
property of a similar type and quality to the Property in the geographic market
in which the Property is located.
"LEGAL REQUIREMENTS" means:
11
(i) all governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
(including Environmental Laws) affecting either Borrower or the Property or
any portion thereof or the construction, ownership, use, alteration or
operation thereof, or any portion thereof (whether now or hereafter enacted
and in force);
(ii) all permits, licenses and authorizations and regulations
relating thereto; and
(iii) all covenants, conditions and restrictions contained in any
instruments at any time in force (whether or not involving Governmental
Authorities) affecting the Property or any portion thereof which, in the
case of this clause (iii), require repairs, modifications or alterations in
or to the Property or any portion thereof, or in any material way limit or
restrict the existing use and enjoyment thereof.
"LENDER" has the meaning set forth in the first paragraph of this
Agreement and in SECTION 9.7.
"LIBOR" means the rate per annum calculated as set forth below:
(i) On each Interest Determination Date, LIBOR for the applicable
period will be the rate for deposits in United States dollars for a
one-month period which appears as the London interbank offered rate on the
display designated as "PAGE 3750" on the Moneyline Telerate Service (or
such other page as may replace that page on that service, or such page or
replacement therefor on any successor service) as the London inter-bank
offered rate as of 11:00 a.m., London time, on such date.
(ii) With respect to an Interest Determination Date on which no
such rate appears as the London interbank offered rate on "PAGE 3750" on
the Moneyline Telerate Service (or such other page as may replace that page
on that service, or such page or replacement therefor on any successor
service) as described above, LIBOR for the applicable period will be
determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on such date to prime banks in the London interbank market for
a one-month period (each a "REFERENCE BANK RATE"). Lender shall request the
principal London office of each of the Reference Banks to provide a
quotation of its Reference Bank Rate. If at least two such quotations are
provided, LIBOR for such period will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for such
period will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by Lender, at approximately 11:00 a.m.,
New York
City time, on such date for loans in United States dollars to leading
European banks for a one-month period.
(iii) If, on any Interest Determination Date, Lender is required but
unable to determine LIBOR in the manner provided in paragraphs (i) and (ii)
above, LIBOR for the applicable period shall be LIBOR as determined on the
previous Interest Determination Date.
12
All percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards to the nearest multiple of 1/100 of 1%
and all U.S. dollar amounts used in or resulting from such calculations will be
rounded to the nearest cent (with one-half cent or more being rounding upwards).
"LIBOR STRIKE RATE" means 7.50%.
"LIEN" means any mortgage, lien (statutory or other), pledge,
hypothecation, assignment, preference, priority, security interest, or any other
encumbrance or charge on or affecting any Collateral or any portion thereof, or
any interest therein (including any conditional sale or other title retention
agreement, any sale-leaseback, any financing lease or similar transaction having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement or similar instrument under the Uniform Commercial Code
or comparable law of any other jurisdiction, domestic or foreign, and
mechanics', materialmen's and other similar liens and encumbrances, as well as
any option to purchase, right of first refusal, right of first offer or other
right to acquire the Property).
"LOAN" has the meaning set forth in SECTION 1.1.
"LOAN AMOUNT" means $105,000,000.
"LOAN DOCUMENTS" means this Agreement, the Note(s), the Deed of Trust
(and related financing statements), the Assignment of Rents and Leases, the
Assignment of Interest Rate Cap Agreement, the Environmental Indemnity, the
Subordination of Property Management Agreement, the Cash Management Agreement,
the Cooperation Agreement, the Trademark Security Agreement and all other
agreements, instruments, certificates and documents delivered by Borrower to
Lender to effectuate the granting to Lender of first-priority Liens on the
Collateral or otherwise in satisfaction of the requirements of this Agreement or
the other documents listed above, as all of the aforesaid may be modified or
replaced from time to time in accordance herewith.
"LOCKOUT PERIOD" has the meaning set forth in SECTION 2.1(a).
"LOCKOUT REDUCTION FEE" means, (i) if Borrower exercises its option to
reduce the Lockout Period a single time in accordance with SECTION 2.1(a), with
respect to each six-month reduction by Borrower of the Lockout Period, an amount
equal to the product of 0.25% multiplied by the Loan Amount, and (ii) if
Borrower exercises its option to reduce the Lockout Period a second time in
accordance with SECTION 2.1(a), with respect to the six-month reduction by
Borrower of the Lockout Period, an additional amount equal to the product of
0.75% multiplied by the Loan Amount.
"LOSS PROCEEDS" means amounts, awards or payments payable to Borrower
or Lender in respect of all or any portion of the Property in connection with a
Casualty or Condemnation thereof (after the deduction therefrom and payment to
Borrower and Lender, respectively, of any and all reasonable expenses incurred
by Borrower and Lender in the recovery thereof, including all attorneys' fees
and disbursements, the fees of insurance experts
13
and adjusters and the costs incurred in any litigation or arbitration with
respect to such Casualty or Condemnation).
"LOSS PROCEEDS ACCOUNT" has the meaning set forth in SECTION 3.8.
"MAJOR LEASE" means (i) any new lease which when aggregated with all
other leases at the Property with the same Tenant, and assuming the exercise of
all expansion rights contained in such lease, is expected to cover more than
10,000 rentable square feet or to contribute more than 2.5% of the contractual
rental revenue (i.e., the sum of base rent and recoveries) of the Property
during any 12-month period, (ii) Leases in effect as of the Closing Date with
the Tenants set forth on SCHEDULE K hereto, (iii) any lease which contains an
option or preferential right to purchase all or any portion of the Property,
(iii) any lease which is with an Affiliate of Borrower as Tenant, or (iv) any
lease which is entered into during the continuance of an Event of Default.
"MAKE-WHOLE PAYMENT" means, in connection the application of Loss
Proceeds to prepay the Loan during the Lockout Period in accordance with SECTION
5.16(d) hereof, the amount of interest that would have been paid on the
principal balance of the Loan so prepaid at an interest rate equal to the Spread
had such principal amount been outstanding through the end of the Lockout
Period.
"MASTER LEASES" each of the leases described on SCHEDULE I hereto.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the
ability of Borrower to perform, or of Lender to enforce, any material provision
of any Loan Document, or (ii) the value, net operating income or use of the
Property or the operation thereof.
"MATERIAL AGREEMENTS" means (i) the REA, (ii) the ESA, and (iii) each
other contract and agreement (other than Leases) relating to the ownership,
management, development, use, operation, leasing, maintenance, repair or
improvement of the Property, or otherwise imposing obligations on Borrower,
under which Borrower would have the obligation to pay more than $100,000 per
annum or which cannot be terminated by Borrower without cause upon 60 days'
notice or less without payment of a termination fee.
"MATERIAL ALTERATION" means any Alteration to be performed by or on
behalf of Borrower at the Property which (a) is reasonably likely to have a
Material Adverse Effect, (b) is reasonably expected to cost in excess of
$3,500,000, as determined by an independent architect, or (c) is reasonably
expected to permit (or is reasonably likely to induce) Tenants to terminate
Leases or ▇▇▇▇▇ rent with respect to 10,000 rentable square feet at the Property
or more, in the aggregate (PROVIDED that (i) Alterations with respect to which
Tenants have delivered to Borrower written waivers of their right to terminate
their Leases or ▇▇▇▇▇ rent in connection with such Alteration (copies of which
have been delivered to Lender) shall be excluded from CLAUSE (c) and (ii)
Alterations to be performed in connection with Major Leases which have been
approved (or are deemed approved) by Lender in accordance with the terms of
SECTION 5.8(b), shall be excluded from CLAUSES (a), (b) and (c).
"MATURITY DATE" means the maturity date of the Loan as set forth in
SECTION 1.2.
14
"MONTHLY CAPITAL RESERVE AMOUNT" means $1,837.
"MONTHLY TI/LC AMOUNT" means $20,246.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"NET OPERATING INCOME" means the excess of Operating Income over
Operating Expenses.
"NONCONSOLIDATION OPINION" means the opinion letter, dated the Closing
Date, delivered by Borrower's counsel to Lender and addressing issues relating
to substantive consolidation in bankruptcy.
"NON-DISCRETIONARY ITEMS" means Taxes, insurance premiums, costs of
utilities, costs associated with ameliorating unsafe or illegal conditions or
arising out of an emergency (in respect of which Borrower shall deliver to
Lender a reasonably detailed description in writing) and costs of complying with
existing contracts and agreements and Legal Requirements.
"NOTE" means the note, dated the Closing Date, made by Borrower to the
order of Lender to evidence the indebtedness owed by Borrower to Lender in
respect of the Loan, as such note may be modified, amended, supplemented or
extended and/or replaced by multiple Notes or divided into Note Components in
accordance with this Agreement and the other Loan Documents.
"NOTE COMPONENT" has the meaning set forth in SECTION 1.3(c).
"OFFICER'S CERTIFICATE" means a certificate delivered to Lender which
is signed by an authorized officer of Borrower or its managing member and
certifies the information therein to the best of such officer's knowledge.
"OPERATING EXPENSES" means, for any period, all operating, renting,
administrative, management, legal and other ordinary expenses of Borrower during
such period, determined on an accrual basis in accordance with GAAP; PROVIDED,
HOWEVER, that such expenses shall not include (i) depreciation, amortization or
other noncash items (other than expenses that are due and payable but not yet
paid), (ii) interest, principal or any other sums due and owing with respect to
the Loan, (iii) income taxes or other taxes in the nature of income taxes or
franchise taxes, (iv) Capital Expenditures, (v) equity distributions, (vi)
reserves deposited in any Collateral Account or (viii) extraordinary and
non-recurring expenses.
"OPERATING INCOME" means, for any period, all Revenues of Borrower
from the Property during such period, determined on an accrual basis in
accordance with GAAP (but without straight-lining of rents), other than (i) Loss
Proceeds (but Operating Income will include (a) rental loss or business
interruption insurance proceeds to the extent allocable to such period and (b)
proceeds from a temporary taking to the extent (1) allocable to such period and
(2) attributable to the abatement of rent by one or more Tenants), (ii) any
revenue attributable to a Lease to the extent it is paid more than 30 days prior
to the due date, (iii) any interest income from any source, (iv) any repayments
received from any third party of principal loaned or advanced to such third
party by Borrower, (v) any proceeds resulting from the Transfer of all or
15
any portion of the Property, (vi) sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any government or
governmental agency, (vii) Termination Fees, and (viii) any other extraordinary
or non-recurring items; PROVIDED that with respect to Termination Fees, during
each month following any Lease termination with respect to which Borrower
receives a Termination Fee which is deposited into the TI/LC Reserve Account in
accordance with SECTION 3.5(d) or (e), for so long as the applicable space
generates no rental income, Borrower shall be deemed to have received Operating
Income in an amount equal to (x) the amount of such Termination Fee divided by
(y) the number of whole and partial months which would have been contained in
the remainder of the term of such Lease, had it not been terminated, from the
effective date of its termination through the date on which its term was
scheduled to expire (excluding any unexercised extension periods); PROVIDED
FURTHER that if Lender disburses all or any portion of a Termination Fee to
Borrower in accordance with CLAUSE (iii) of SECTION 3.5(e), the amounts included
in Operating Income in accordance with the foregoing proviso shall be
proportionately reduced by the amount of funds so disbursed to Borrower.
"PARTICIPATION" has the meaning set forth in SECTION 9.7(b).
"PAYMENT DATE" means the Initial Payment Date and, thereafter, the
tenth day of each month (or, if such tenth day is not a Business Day, the first
preceding Business Day).
"PEG BALANCE" at any time means, so long as no Cash Trap Period is
continuing, the aggregate amount of payments required to be made under SECTIONS
3.2(b)(i) and (ii) on the next Payment Date, as specified in the most recent
notice from the Lender to the Cash Management Bank pursuant to the Cash
Management Agreement.
"PERMITS" means all licenses, permits, variances and certificates used
in connection with the ownership, operation, use or occupancy of the Property
(including certificates of occupancy, business licenses, state health department
licenses, licenses to conduct business and all such other permits, licenses and
rights, obtained from any Governmental Authority or private Person concerning
ownership, operation, use or occupancy of the Property), but excluding any of
the foregoing required to be obtained solely by a Tenant in accordance with its
Lease and/or applicable Legal Requirements.
"PERMITTED DEBT" means:
(i) the Indebtedness;
(ii) Trade Payables not represented by a note, customarily paid by
Borrower within 60 days of incurrence and in fact not more than 60 days
past due, and equipment financing, in each case, incurred in the ordinary
course of Borrower's ownership and operation of the Property, in amounts
reasonable and customary for similar properties and not exceeding 1.5% of
the Loan Amount in the aggregate;
(iii) written indemnities (x) under Leases or (y) entered into in
the ordinary course of business and on customary or commercially reasonable
terms and conditions; and
16
(iv) a Permitted Expansion Financing.
"PERMITTED EXPANSION FINANCING" means Debt incurred by the Borrower
not to exceed $15,000,000 and secured by both the Property and a portion of the
real property described on Schedule H-1 hereto and related improvements (the
"EXPANSION SPACE"), which Debt is incurred in connection with the development of
the Expansion Space and otherwise satisfies the conditions set forth in SCHEDULE
H-2.
"PERMITTED ENCUMBRANCES" means:
(i) the Liens created by the Loan Documents;
(ii) all Liens and other matters specifically disclosed on
Schedule B of the Qualified Title Insurance Policy;
(iii) Liens, if any, for Taxes not yet delinquent;
(iv) mechanics', materialmen's or similar Liens, if any, and Liens
for delinquent taxes or impositions, in each case only if being contested
in good faith and by appropriate proceedings, PROVIDED that no such Lien is
in imminent danger of foreclosure and PROVIDED FURTHER that either (a) each
such Lien is released or discharged of record or fully insured over by the
title insurance company issuing the Qualified Title Insurance Policy within
30 days of Borrower receiving notice thereof or otherwise becoming aware of
its existence, or (b) Borrower deposits with Lender, by the expiration of
such 30-day period, an amount equal to 125% of the dollar amount of such
Lien or a bond in the aforementioned amount from such surety, and upon such
terms and conditions, as is reasonably satisfactory to Lender, as security
for the payment or release of such Lien, or other security reasonably
satisfactory to Lender;
(v) rights of existing and future Tenants as tenants only pursuant
to written Leases entered into in conformity with the provisions of this
Agreement; and
(vi) (a) zoning restrictions, building codes, land use laws and
other Legal Requirements regulating the use or occupancy of the Property
and (b) easements, rights-of-way, covenants, conditions, restrictions on
use of real property and other similar matters affecting the Property which
do not have a Material Adverse Effect.
"PERMITTED INVESTMENTS" means the following, subject to the
qualifications hereinafter set forth:
(i) obligations of, or obligations guaranteed as to principal and
interest by, the U.S. government or any agency or instrumentality thereof,
when such obligations are backed by the full faith and credit of the United
States of America;
(ii) federal funds, unsecured certificates of deposit, time
deposits, banker's acceptances, and repurchase agreements having maturities
of not more than 365 days of any bank, the short-term debt obligations of
which are rated A-1+ (or the equivalent) by each of the Rating Agencies
and, if it has a term in excess of three months, the long-term
17
debt obligations of which are rated AAA (or the equivalent) by each of the
Rating Agencies;
(iii) deposits that are fully insured by the Federal Deposit
Insurance Corp. (FDIC);
(iv) debt obligations that are rated AAA or higher (or the
equivalent) by each of the Rating Agencies;
(v) commercial paper rated A-1+ (or the equivalent) by each of the
Rating Agencies;
(vi) investment in money market funds rated AAAm or AAAm-G (or the
equivalent) by each of the Rating Agencies; and
(vii) such other investments as to which Lender shall have received
Rating Confirmation.
Notwithstanding the foregoing, "Permitted Investments" (i) shall exclude any
security with the Standard & Poor's "r" symbol (or any other Rating Agency's
corresponding symbol) attached to the rating (indicating high volatility or
dramatic fluctuations in their expected returns because of market risk), as well
as any mortgage-backed securities and any security of the type commonly known as
"strips"; (ii) shall not have maturities in excess of one year; (iii) shall be
limited to those instruments that have a predetermined fixed dollar of principal
due at maturity that cannot vary or change; and (iv) shall exclude any
investment where the right to receive principal and interest derived from the
underlying investment provides a yield to maturity in excess of 120% of the
yield to maturity at par of such underlying investment. Interest may either be
fixed or variable, and any variable interest must be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionately with
that index. No investment shall be made which requires a payment above par for
an obligation if the obligation may be prepaid at the option of the issuer
thereof prior to its maturity. All investments shall mature or be redeemable
upon the option of the holder thereof on or prior to the earlier of (x) three
months from the date of their purchase or (y) the Business Day preceding the day
before the date such amounts are required to be applied hereunder.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association or
Governmental Authority and any fiduciary acting in such capacity on behalf of
any of the foregoing.
"PLAN ASSETS" means assets of any (i) employee benefit plan (as
defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as
defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code,
or (iii) governmental plan (as defined in Section 3(32) of ERISA) subject to
federal, state or local laws, rules or regulations substantially similar to
Title I of ERISA or Section 4975 of the Code.
"POLICIES" has the meaning set forth in SECTION 5.15(b).
"PREPAYMENT NOTICE" has the meaning set forth in SECTION 2.1(c).
18
"PRIME RATE" means the "prime rate" published in the "Money Rates"
section of THE WALL STREET JOURNAL. If THE WALL STREET JOURNAL ceases to publish
the "prime rate," then Lender shall select an equivalent publication that
publishes such "prime rate," and if such "prime rate" is no longer generally
published or is limited, regulated or administered by a governmental or
quasi-governmental body, then Lender shall reasonably select a comparable
interest rate index.
"PRINCIPAL INDEBTEDNESS" means the principal balance of the Loan
outstanding from time to time.
"PROHIBITED TRANSFEREE" means any of the Persons listed on SCHEDULE J.
"PROPERTY" means the real property described on SCHEDULE A, together
with all buildings and other improvements thereon.
"QUALIFIED EQUITYHOLDER" means (i) Sponsor, (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
(iii) a corporation which is an Affiliate of the Sponsor formed for the purpose
of selling its capital stock in an initial public offering, (iv) any trust whole
sole beneficiaries are the immediate family members of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
provided the trustee of such trust has substantial commercial real estate
experience, or (v) a bank, saving and loan association, investment bank,
insurance company, trust company, commercial credit corporation, pension plan,
pension fund or pension advisory firm, mutual fund, government entity or plan,
real estate company, investment fund or an institution substantially similar to
any of the foregoing, provided in each case under clause (iii), (iv) and (v)
that (x) such Person has total assets (in name or under management) in excess of
$2 billion and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder's equity in excess of $1
billion, and (y) Rating Confirmation is received with respect thereto.
"QUALIFIED SURVEY" means current title surveys of the Property,
certified to Borrower, the title company issuing the Qualified Title Insurance
Policy and Lender and their respective successors and assigns, in form and
substance reasonably satisfactory to Lender.
"QUALIFIED TITLE INSURANCE POLICY" means an ALTA extended coverage
mortgagee's title insurance policy (1970 unmodified form, where issuable) in
form and substance reasonably satisfactory to Lender.
"RATING AGENCY" means (i) until a Securitization, S&P, ▇▇▇▇▇'▇ and
Fitch, and (ii) from and after a Securitization, those of S&P, ▇▇▇▇▇'▇ and Fitch
that rate the Certificates issued in the Securitization.
"RATING CONFIRMATION" means, with respect to any proposed action,
confirmation in writing from each of the Rating Agencies that such action shall
not result, in and of itself, in a downgrade, withdrawal or qualification of any
rating then assigned to any outstanding Certificates; except that if a
Securitization taking the form of a transaction rated by the Rating Agencies has
not occurred or is no longer in place, then "Rating Confirmation" shall instead
mean that the matter in question is subject to the prior written approval of
Lender in its reasonable discretion (it being agreed that it shall be reasonable
for Lender to withhold such
19
approval if the proposed action is not in compliance with reasonably prudent
lending practices or, except if a Securitization that had occurred is no longer
in place, the then-applicable guidelines of the Rating Agencies). No Rating
Confirmation shall be regarded as having been received unless and until any
conditions imposed on its effectiveness by any Rating Agency shall have been
satisfied.
"REA" means that certain Amended and Restated Reciprocal Easement, Use
and Operating Agreement dated as of November 14, 1997 between Interface
Group-Nevada, Inc., Grand Canal Shops Mall Construction LLC (predecessor to
Borrower) and Venetian Casino Resort, LLC, as amended by that certain First
Amendment to Amended and Restated Reciprocal Easement, Use and Operating
Agreement dated as of December 20, 1999 among Interface Group-Nevada, Inc.,
Borrower, Lido Casino Resort, LLC and Venetian Casino Resort, LLC, as further
amended by that certain Second Amendment to Amended and Restated Reciprocal
Easement Agreement dated as of the date hereof by and among Interface
Group-Nevada, Inc., Borrower, Lido Casino Resort, LLC and Venetian Casino
Resort, LLC, as the same may be further amended, restated, supplemented or
otherwise modified from time to time.
"REA INSURANCE ESCROW ACCOUNT" has the meaning set forth in SECTION
3.4(e).
"REFERENCE BANKS" means four major banks in the London interbank
market selected by Lender.
"REGULATORY CHANGE" means any change after the Closing Date in
federal, state or foreign laws or regulations or the adoption or the making,
after such date, of any interpretations, directives or requests applying to a
class of banks or companies controlling banks, including Lender, of or under any
federal, state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof; provided that such change affects
similarly situated banks, companies controlling banks or other financial
institutions and is not applicable to a Lender primarily by reason of such
Lender's particular conduct or financial condition. For purposes of the
foregoing proviso, "similarly situated", when used with reference to banks,
companies controlling banks and other financial institutions, shall not include
entities that are similarly situated by reason of having a materially negative
or adverse financial or credit condition.
"RELEASE" with respect to any Hazardous Substance means any release,
deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Substances into the indoor or outdoor environment
(including the movement of Hazardous Substances through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata).
"RENT ROLL" has the meaning set forth in SECTION 4.14(a).
"REVENUES" means all rents, rent equivalents, moneys payable as
damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties
(including all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for the
account of or
20
benefit of Borrower from any and all sources including any obligations now
existing or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and occupancy of
property or rendering of services by Borrower and proceeds, if any, from
business interruption or other loss of income insurance.
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"SECURITIZATION" means a transaction in which all or any portion of
the Loan is deposited into one or more trusts which issue Certificates to
investors, or a similar transaction.
"SECURITIZATION ISSUER" means the issuer of Certificates in a
Securitization.
"SERVICE" means the Internal Revenue Service or any successor agency
thereto.
"SERVICER" means the entity or entities appointed by Lender pursuant
to and in accordance with SECTION 9.22 hereof from time to time to serve as
servicer and/or special servicer of the Loan. If at any time no entity is so
appointed, the term "Servicer" shall be deemed to refer to Lender.
"SINGLE-PURPOSE ENTITY" means a Person which (a) is or was formed
solely for the purpose of acquiring or holding the Property or a direct or
indirect equity interest in Borrower, (b) does not engage in any business
unrelated to the Property or the ownership of such equity interest, (c) does not
have any assets other than those related to its interest in the Property or such
equity interest, or any Debt other than Permitted Debt, (d) maintains books,
records, accounts, financial statements, stationery, invoices and checks which
are separate and apart from those of any other Person (except that such Person's
financial position, assets, results of operations and cash flows may be included
in the consolidated financial statements of an Affiliate of such Person in
accordance with GAAP, PROVIDED that any such consolidated financial statements
shall contain a note indicating that such Person and its Affiliates are separate
legal entities and maintain records, books of account and bank accounts separate
and apart from any other Person), (e) is subject to and complies with all of the
limitations on powers and separateness requirements set forth in its
organizational documentation as of the Closing Date, (f) holds itself out as
being a Person separate and apart from each other Person and not as a division
or part of another Person, conducts its business in its own name (except for
services rendered under a management agreement with an Affiliate, so long as the
manager, or equivalent thereof, under such management agreement holds itself out
as an agent of Borrower), and exercises reasonable efforts to correct any known
misunderstanding actually known to it regarding its separate identity, and
maintains an arm's-length relationship with its Affiliates, (g) pays its own
liabilities out of its own funds (including the salaries of its own employees)
and reasonably allocates any overhead that is shared with an Affiliate,
including, but not limited to, paying for shared office space and services
performed by any officer or employee of an Affiliate, (h) maintains a sufficient
number of employees in light of its contemplated business operations, (i)
conducts its business so that the assumptions made with respect to it in the
Nonconsolidation Opinion shall at all times be true and correct in all material
respects, (j) observes all applicable limited partnership, limited liability
company or corporate formalities, as the case may be, in all material respects,
(k) does not commingle its assets with those of any other Person and holds such
assets
21
in its own name, (l) does not assume, guarantee or become obligated for the
debts of any other Person or hold out its credit as being available to satisfy
the obligations or securities of others, (m) does not acquire obligations or
securities of its partners, members or shareholders, as the case may be, (n)
does not pledge its assets for the benefit of any other Person (except in
connection with the Loan and any Permitted Debt) or make any loans or advances
to any Person, (o) maintains adequate capital in light of its contemplated
business operations, (p) in the case of a corporation, is a Single-Purpose
Entity with two Independent Directors on its Board of Directors, (q) in the case
of a partnership, has a corporate general partner which is a Single-Purpose
Entity (or has a partnership or a limited liability company as general partner
which, in turn, has a corporate general partner or member, as applicable, which
is a Single-Purpose Entity), (r) in the case of a limited liability company, has
a board of directors with two Independent Directors (or a direct or indirect
member which is a corporate Single-Purpose Entity or a limited liability company
having a board of directors with two Independent Directors), and (s) has a
partnership agreement, operating agreement or certificate of incorporation, as
the case may be, which provides that for so long as the Loan or any portion
thereof is outstanding, it shall not take or consent to any of the following
actions except to the extent expressly permitted in this Agreement and the other
Loan Documents:
(i) the dissolution, liquidation, consolidation, merger or sale of
all or substantially all of its or any of its subsidiaries' assets;
(ii) the engagement by it in any business other than the
acquisition, development, management, leasing, ownership, maintenance and
operation of the Property and activities incidental thereto or the
ownership of a direct or indirect equity interest in the Borrower;
(iii) the filing, or consent to the filing, of a bankruptcy or
insolvency petition, any general assignment for the benefit of creditors or
the institution of any other insolvency proceeding, as debtor, or the
seeking or consenting to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official, in each
case in respect of it or any of its subsidiaries, without the affirmative
vote of both of the Independent Directors; and
(iv) any amendment or modification of any provision of its
organizational documents relating to qualification as a "Single-Purpose
Entity".
"SPONSOR" means Las Vegas Sands, Inc., and its successors.
"SPREAD" means
(i) initially, 1.75%; and
(ii) following the bifurcation of the Note into multiple Note
Components pursuant to SECTION 1.3(c), the weighted average of the Component
Spreads at the time of determination, weighted on the basis of the corresponding
Component Balances.
"SUBORDINATION OF PROPERTY MANAGEMENT AGREEMENT" means the consent
and agreement of manager and subordination of management agreement executed by
Borrower and
22
the Approved Property Manager on the Closing Date, as the same may from time to
time be modified or replaced in accordance herewith.
"TAX AND INSURANCE ESCROW ACCOUNT" has the meaning set forth in
SECTION 3.4(a).
"TAXES" means all real estate and personal property taxes,
assessments, fees, taxes on rents or rentals, water rates or sewer rents,
facilities and other governmental, municipal and utility district charges or
other similar taxes or assessments now or hereafter levied or assessed or
imposed against the Property or Borrower with respect to the Property or rents
therefrom or which may become Liens upon the Property, without deduction for any
amounts reimbursable to Borrower by third parties.
"TENANT" means any Person liable by contract or otherwise to pay
monies (including a percentage of gross income, revenue or profits) pursuant to
a Lease.
"TENANT IMPROVEMENTS" means, collectively, (i) tenant improvements to
be undertaken for any Tenant which are required to be completed by or on behalf
of Borrower pursuant to the terms of such Tenant's Lease, and (ii) tenant
improvements paid or reimbursed through allowances to a Tenant pursuant to such
Tenant's Lease.
"TENANT NOTICE" has the meaning set forth in SECTION 3.1(b).
"TERMINATION FEE" has the meaning set forth in SECTION 3.5(d).
"TERRORISM EVENT" means a terrorist act affecting the Property, the
Hotel/Casino and/or the Convention Center that the Lender determines might
result in a Material Adverse Effect, but only if, at the time of such event,
Borrower does not have in effect insurance coverage for acts of terrorism
providing for rental loss and/or business interruption insurance covering the
Property for a period (subject to either a 30-day waiting period or a 30-day
deductible) of not less than 12 months from the date of Casualty.
"TEST PERIOD" means each six-month period ending on the last day of a
Fiscal Quarter commencing with the six-month period ending September 30, 2002.
"TI/LC RESERVE ACCOUNT" has the meaning set forth in SECTION 3.5.
"TRADEMARK SECURITY AGREEMENT" means the trademark security agreement
executed by Borrower on the Closing Date, as the same may from time to time be
modified or replaced in accordance herewith.
"TRADE PAYABLES" means unsecured amounts payable by or on behalf of
Borrower for or in respect of the operation of the Property in the ordinary
course and which would under GAAP be regarded as ordinary expenses, including
amounts payable to suppliers, vendors, contractors, mechanics, materialmen or
other Persons providing property or services to the Property or Borrower.
"TRANSACTION" means the transaction contemplated by the Loan
Documents.
23
"TRANSACTION COSTS" means the costs and expenses described in SECTION
9.17.
"TRANSFER" means the sale or other whole or partial conveyance of all
or any portion of the Property or any direct or indirect interest therein to a
third party, including granting of any purchase options, rights of first
refusal, rights of first offer or similar rights in respect of any portion of
the Property or the subjecting of any portion of the Property to restrictions on
transfer; except that the conveyance of a space lease at the Property in
accordance herewith shall not constitute a Transfer.
"TREASURY CONSTANT YIELD" means the arithmetic mean of the rates
published as "Treasury Constant Maturities" as of 5:00 p.m.,
New York time, for
the five Business Days preceding the date on which acceleration has been
declared, as shown on the USD screen of the Moneyline Telerate Service (or such
other page as may replace that page on that service, or such other page or
replacement therefor on any successor service), or if such service is not
available, the Bloomberg Service (or any successor service), or if neither the
Moneyline Telerate Service nor the Bloomberg Service is available, under Section
504 in the weekly statistical release designated H.15(519) (or any successor
publication) published by the Board of Governors of the Federal Reserve System,
for "On the Run" U.S. Treasury obligations corresponding to the scheduled
Maturity Date. If no such maturity shall so exactly correspond, yields for the
two most closely corresponding published maturities shall be calculated pursuant
to the foregoing sentence and the Treasury Constant Yield shall be interpolated
or extrapolated (as applicable) from such yields on a straight-line basis
(rounding, in the case of relevant periods, to the nearest month).
"USE" means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance.
"U.S. PERSON" means a United States person within the meaning of
Section 7701(a)(30) of the Code.
"U.S. TAX" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof.
"WASTE" means any material abuse or destructive use (whether by action
or inaction) of the Property.
(b) RULES OF CONSTRUCTION. All references to sections, schedules
and exhibits are to sections, schedules and exhibits in or to this Agreement
unless otherwise specified. Unless otherwise specified: (i) all meanings
attributed to defined terms in this Agreement shall be equally applicable to
both the singular and plural forms of the terms so defined, (ii) "including"
means "including, but not limited to", and (iii) "mortgage" means a mortgage,
deed of trust, deed to secure debt or similar instrument, as applicable, and
"mortgagee" means the secured party under a mortgage, deed of trust, deed to
secure debt or similar instrument. All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP, as same may be
modified in this Agreement.
24
ARTICLE I
GENERAL TERMS
1.1. THE LOAN. On the Closing Date, subject to the terms and
conditions of this Agreement, Lender shall make a loan to Borrower (the "LOAN")
in an initial principal amount equal to the Loan Amount. The Loan shall be
evidenced by the Note and shall be secured by the Collateral.
1.2. THE TERM.
(a) The Maturity Date of the Loan shall initially be the Payment
Date in June 2005, or such earlier date as may result from acceleration.
(b) Borrower shall have two successive options to extend the
scheduled Maturity Date of the Loan to the Payment Date in the month containing
the one-year anniversary of the Maturity Date as theretofore in effect (the
period of each such extension, an "EXTENSION TERM"), PROVIDED (i) Borrower shall
deliver to Lender written notice of such extension at least 60 days prior to the
Maturity Date as theretofore in effect; (ii) no Event of Default or Cash Trap
Period shall be continuing on either the date of such notice or the Maturity
Date as theretofore in effect; (iii) Borrower shall have obtained an Extension
Interest Rate Cap Agreement for the applicable Extension Term and collaterally
assigned such Extension Interest Rate Cap Agreement to Lender pursuant to an
Assignment of Interest Rate Cap Agreement; and (iv) Borrower shall have paid all
reasonable out-of-pocket expenses incurred by Lender in connection with such
extension. If Borrower fails to exercise any extension option in accordance with
the provisions of this Agreement, such extension option, and any subsequent
extension option hereunder, will automatically cease and terminate.
1.3. INTEREST AND PRINCIPAL.
(a) Commencing with the Initial Payment Date and on each and every
Payment Date thereafter, Borrower shall pay interest on the Principal
Indebtedness for the Interest Accrual Period in which such Payment Date falls at
a rate per annum equal to the sum of LIBOR, determined as of the Interest
Determination Date immediately preceding such Interest Accrual Period, PLUS the
Spread (except that interest shall be payable on the Indebtedness, including due
and unpaid interest, at the Default Rate with respect to any portion of such
Interest Accrual Period falling during the continuance of an Event of Default).
Interest accruing for the first Interest Accrual Period shall be prepaid on the
Closing Date from the Loan proceeds otherwise to be disbursed to Borrower at
Closing. Interest payable hereunder shall be computed on the basis of a 360-day
year and the actual number of days elapsed. All payments made by Borrower
hereunder or under the other Loan Documents shall be made irrespective of, and
without any deduction for, any setoffs or counterclaims.
(b) No prepayments of the Loan shall be permitted except as
provided in SECTIONS 2.1 and 5.16(d). The entire outstanding Principal
Indebtedness, together with all interest thereon through the end of the Interest
Accrual Period in which the Maturity Date falls (calculated as if such Principal
Indebtedness were outstanding for the entire Interest Accrual
25
Period) and all other amounts then due under the Loan Documents shall be due and
payable by Borrower to Lender on the Maturity Date.
(c) Upon written notice from Lender to Borrower (the
"COMPONENTIZATION NOTICE"), the Note will be deemed to have been subdivided
(retroactively as of the Closing) into multiple components ("NOTE COMPONENTS").
Each Note Component shall have such notional balance (a "COMPONENT BALANCE") as
Lender shall specify in the Componentization Notice and an interest rate equal
to the sum of LIBOR plus such amount as Lender shall specify in the
Componentization Notice (each such amount, a "COMPONENT SPREAD"); PROVIDED that
(i) the sum of the Component Balances of all Note Components shall equal the
then-outstanding Principal Indebtedness, and (ii) the initial weighted average
of the Component Spreads, weighted on the basis of their respective Component
Balances, shall equal the percentage set forth in clause (i) of the definition
of "Spread". If requested by Lender, each Note Component shall be represented by
a separate physical Note. Borrower shall execute and return to Lender each such
Note within two Business Days after Borrower's receipt of an execution copy
thereof.
(d) Any payments of interest not paid when due hereunder shall
bear interest at the applicable Default Rate and, when paid, shall be
accompanied by a late fee in an amount equal to 3% times the amount of such late
payment. Borrower acknowledges that (i) a delinquent payment will cause damage
to Lender; (ii) the late fee is intended to compensate Lender for the loss of
use of the delinquent payment and the expense incurred and time and effort
associated with recovering the delinquent payment; (iii) it will be extremely
difficult and impractical to ascertain the extent of Lender's damages caused by
the delinquency; and (iv) the late fee represents Lender's and Borrower's
reasonable estimate of Lender's damages from the delinquency and is not a
penalty.
(e) If all or any portion of the Loan is repaid following
acceleration of the Loan resulting from an Event of Default that occurs prior to
the end of the Lockout Period, Borrower shall pay to Lender an amount equal to
the Event of Default Yield Maintenance Premium. Amounts received in respect of
the Indebtedness following the acceleration of the Loan shall be applied toward
the components of the Indebtedness in such sequence as Lender shall elect in its
sole discretion or, at Lender's sole discretion, toward the payment of Taxes,
Operating Expenses and Capital Expenditures, with the result that Event of
Default Yield Maintenance Premiums shall accrue until the Principal Indebtedness
is repaid after acceleration of the Loan but no amount received from Borrower
shall constitute payment of an Event of Default Yield Maintenance Premium until
Lender in its sole discretion so determines. Borrower acknowledges that (i) a
prepayment will cause damage to Lender; (ii) the Event of Default Yield
Maintenance Premium is intended to compensate Lender for the loss of their
investment and the expense incurred and time and effort associated with making
the Loan, which will not be fully repaid if the Loan is prepaid; (iii) it will
be extremely difficult and impractical to ascertain the extent of the Lender's
damages caused by a prepayment after an acceleration or any other prepayment not
permitted by the Loan Documents; and (iv) the Event of Default Yield Maintenance
Premium represents the Lender's and Borrower's reasonable estimate of Lender's
damages for the prepayment and is not a penalty.
26
1.4. INTEREST RATE CAP AGREEMENTS.
(a) On or prior to the Closing Date, Borrower shall obtain, and
thereafter maintain in effect until the Initial Maturity Date, the Initial
Interest Rate Cap Agreement, which shall be coterminous with the initial term of
the Loan and have a notional amount equal to the Loan Amount. The Initial
Interest Rate Cap Agreement shall have a LIBOR strike rate equal to or less than
the LIBOR Strike Rate.
(b) If Borrower exercises any of its options to extend the term of
the Loan pursuant to SECTION 1.2(b), then on or prior to the commencement of the
applicable Extension Term Borrower shall obtain an Extension Interest Rate Cap
Agreement having (x) a term coterminous with such Extension Term, (y) a notional
amount at least equal to the Principal Indebtedness as of the first day of such
Extension Term, and (z) a LIBOR strike rate equal to or less than the LIBOR
Strike Rate.
(c) Borrower shall collaterally assign to Lender pursuant to an
Assignment of Interest Rate Cap Agreement all of its right, title and interest
in any and all payments under each Interest Rate Cap Agreement and shall deliver
to Lender an executed counterpart of such Interest Rate Cap Agreement and obtain
the consent of the Acceptable Counterparty to such collateral assignment (as
evidenced by the Acceptable Counterparty's execution of such Collateral
Assignment of Interest Rate Cap Agreement).
(d) Borrower shall comply with all of its obligations under the
terms and provisions of each Interest Rate Cap Agreement. All amounts paid under
an Interest Rate Cap Agreement shall be deposited directly into the Cash
Management Account. Borrower shall take all actions reasonably requested by
Lender to enforce Lender's rights under the Interest Rate Cap Agreement in the
event of a default by the counterparty thereunder and shall not waive, amend or
otherwise modify any of its rights thereunder.
1.5. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided in this Agreement, all payments and prepayments under this Agreement
(including any deposit into the Cash Management Account pursuant to SECTION
3.2(b)) shall be made to Lender not later than 1:00 p.m.,
New York City time, on
the date when due and shall be made in lawful money of the United States of
America by wire transfer in federal or other immediately available funds to the
account specified from time to time by Lender. Any funds received by Lender
after such time shall be deemed to have been paid on the next succeeding
Business Day. Lender shall notify Borrower in writing of any changes in the
account to which payments are to be made. If the amount received from Borrower
(or from the Cash Management Account pursuant to SECTION 3.2(b)) is less than
the sum of all amounts then due and payable hereunder, such amount shall be
applied toward the components of the Indebtedness (E.G., interest, principal and
other amounts payable hereunder), the Loan and the Note Components in such
sequence as Lender shall elect in its sole discretion.
1.6. REGULATORY CHANGE. If, as a result of any Regulatory Change,
any reserve, special deposit or similar requirements relating to any extensions
of credit or other assets of, or any deposits with, any Lender is imposed,
modified or deemed applicable and the result is to increase the cost to such
Lender of making LIBOR-based loans, or to reduce the amount
27
receivable by Lender hereunder in respect of any portion of the Loan with
respect to LIBOR-based loans by an amount deemed by such Lender to be material
(such increases in cost and reductions in amounts receivable, "INCREASED
COSTS"), then Borrower agrees that it will pay to Lender upon Lender's request
such additional amount or amounts (based upon a reasonable allocation thereof by
such Lender to the LIBOR-based loans made by such Lender) as will compensate
such Lender for such Increased Costs to the extent that such Increased Costs are
reasonably allocable to the Loan. Lender will notify Borrower in writing of any
event occurring after the Closing Date which will entitle Lender to compensation
pursuant to this SECTION 1.6 as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation and will designate
a different lending office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the reasonable judgment
of such Lender, be otherwise disadvantageous to such Lender. If such Lender
shall fail to notify Borrower of any such event within 90 days following the end
of the month during which such event occurred, then Borrower's liability for any
amounts described in this Section incurred by such Lender as a result of such
event shall be limited to those attributable to the period occurring subsequent
to the 90th day prior to the date upon which such Lender actually notified
Borrower of the occurrence of such event. Notwithstanding the foregoing, in no
event shall Borrower be required to compensate any Lender for any portion of the
income or franchise taxes of Lender, whether or not attributable to payments
made by Borrower. If a Lender requests compensation under this SECTION 1.6,
Borrower may, by notice to such Lender, require that such Lender furnish to
Borrower a statement setting forth in reasonable detail the basis for requesting
such compensation and the method for determining the amount thereof.
1.7. TAXES.
(a) Borrower agrees to indemnify Lender against any present or
future stamp, documentary or other similar or related taxes or other similar or
related charges now or hereafter imposed, levied, collected, withheld or
assessed by any United States Governmental Authority by reason of the execution
and delivery of the Loan Documents and any consents, waivers, amendments and
enforcement of rights under the Loan Documents (excluding income taxes, taxes on
receipts and franchise taxes).
(b) If Borrower is required by law to withhold or deduct any
amount from any payment hereunder in respect of any U.S. Tax, Borrower shall
withhold or deduct the appropriate amount, remit such amount to the appropriate
Governmental Authority and pay to each Person to whom there has been an
Assignment or Participation of the Loan and who is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less
than the amount stated in this Agreement to be then due and payable; except that
the foregoing obligation to pay such additional amounts shall not apply (i) to
any assignee that has not complied with the obligations contained in SECTION
9.7(c), (ii) to any U.S. Taxes imposed solely by reason of the failure by such
Person (or, if such Person is not the beneficial owner of the relevant Loan,
such beneficial owner) to comply with applicable certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or connections with the United States of America of such
Person (or beneficial owner, as the case may be) if such compliance is required
by statute or regulation
28
of the United States of America as a precondition to relief or exemption from
such U.S. Taxes; or (iii) with respect to any Person who is a fiduciary or
partnership or other than the sole beneficial owner of such payment, to any U.S.
Tax imposed with respect to payments made under any Note to a fiduciary or
partnership to the extent that the beneficial owner or member of the partnership
would not have been entitled to the additional amounts if such beneficial owner
or member of the partnership had been the holder of the Note.
(c) Within 30 days after paying any amount from which it is
required by law to make any deduction or withholding, and within 30 days after
it is required by law to remit such deduction or withholding to any relevant
taxing or other authority, Borrower shall deliver to such non-U.S. Person
satisfactory evidence of such deduction, withholding or payment (as the case may
be).
1.8. RELEASE. Upon payment of the Indebtedness in full, Lender
shall execute instruments prepared by Borrower and reasonably satisfactory to
Lender releasing and discharging all Liens on all Collateral securing payment of
the Indebtedness (subject to Borrower's obligation to pay any associated fees
and expenses), including all balances in the Collateral Accounts.
ARTICLE II
VOLUNTARY PREPAYMENT
2.1. VOLUNTARY PREPAYMENT.
(a) Borrower shall be prohibited from prepaying the Loan, in whole
or in part, until the first Payment Date following the second anniversary of the
Closing Date; PROVIDED, HOWEVER, that Borrower shall have the option (which, at
Borrower's election, may be exercised once or twice) to reduce the Lockout
Period to not less than the period from the Closing Date until the first Payment
Date following the first anniversary of the Closing Date (in each case, the
period ending on and including the applicable Payment Date, the "LOCKOUT
PERIOD") upon payment to Lender with respect to each six-month reduction of the
Lockout Period of the applicable Lockout Reduction Fee.
(b) After the expiration of the Lockout Period, provided no Event
of Default is continuing, Borrower may voluntarily prepay the Loan in whole or
in part on any Business Day without penalty, except that no prepayments shall be
permitted on the last two Business Days in any Interest Accrual Period. Each
such prepayment shall be accompanied by the amount of interest theretofore
accrued but unpaid in respect of the principal amount so prepaid, plus the
amount of interest which would have accrued on the principal amount so prepaid
had it remained outstanding through the end of the Interest Accrual Period in
which such prepayment is made. If the Loan has been bifurcated into Note
Components pursuant to SECTION 1.3(c), all prepayments of the Loan made by
Borrower in accordance with this SECTION 2.1 shall be applied to the Note
Components in ascending order of interest rate (I.E., first to the Note
Component with the lowest Component Spread until its outstanding principal
balance has been reduced to zero, then to the Note Component with the second
lowest Component Spread until its outstanding principal balance has been reduced
to zero, and so on). Following any such prepayment, Borrower may
29
release or transfer, free and clear of the Lien of the Loan Documents, a portion
of the notional amount of the Interest Rate Cap Agreement equal to the amount of
such prepayment.
(c) As a condition to any voluntary prepayment, Borrower shall
give Lender written notice (a "PREPAYMENT NOTICE") of its intent to prepay,
which notice must be given not later than the Payment Date prior to the
commencement of the Interest Accrual Period in which such prepayment is to be
made and must specify the Business Day on which such prepayment is to be made
and the amount of such prepayment. If any such notice is given, the amount
specified in such notice will be due and payable on the date specified therein.
Notwithstanding the foregoing, if no Event of Default is then continuing beyond
the applicable cure period, such Prepayment Notice may be rescinded by Borrower
upon delivery of written notice to Lender not later than the Payment Date
occurring in the Interest Accrual Period in which such prepayment was to be made
(PROVIDED that Borrower shall compensate Lender for any and all reasonable
out-of-pocket expenses incurred by Lender and/or its agents resulting from such
rescission).
ARTICLE III
ACCOUNTS
3.1. CASH MANAGEMENT ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the collection
of income from the Property (the "CASH MANAGEMENT ACCOUNT"). As a condition
precedent to the closing of the Loan, Borrower shall cause the Cash Management
Bank to execute and deliver a Cash Management Agreement which provides, INTER
ALIA, that no party other than Lender shall have the right to withdraw funds
from the Cash Management Account. The fees and expenses of the Cash Management
Bank shall be paid by Borrower.
(b) Within five Business Days following the Closing Date, Borrower
shall deliver to each Tenant in the Property a written notice (a "TENANT
NOTICE") in the form of EXHIBIT A instructing that (i) all payments under the
Leases shall thereafter be transmitted by them directly to, and deposited
directly into, the Cash Management Account and (ii) such instruction may not be
rescinded unless and until such Tenant receives from Borrower or Lender a copy
of Lender's written consent to such rescission. Borrower shall send a copy of
each such written notice to Lender and shall redeliver such notices to each
Tenant until such time as such Tenant complies therewith. Borrower covenants to
cause all cash Revenues relating to the Property and all other money received by
Borrower with respect to the Property (other than tenant security deposits
required to be held in escrow accounts) to be deposited in the Cash Management
Account by the end of the first Business Day following Borrower's or the
Approved Property Manager's receipt thereof; and Borrower shall be permitted to
deposit in the Cash Management Account such additional amounts as Borrower may
elect.
(c) Lender shall have the right to replace the Cash Management
Bank with any other financial institution reasonably satisfactory to Borrower in
which Eligible Accounts may be maintained which will promptly execute and
deliver to Lender a Cash Management Agreement (and Borrower shall cooperate with
Lender in connection with such transfer) in the
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event that (i) at any time the Cash Management Bank ceases to be an Eligible
Institution (unless the Collateral Accounts are maintained as segregated trust
accounts in accordance with clause (ii) of the definition of Eligible Accounts),
or (ii) the Cash Management Bank fails to comply with the Cash Management
Agreement.
3.2. DISTRIBUTIONS FROM CASH MANAGEMENT ACCOUNT.
(a) The Cash Management Agreement shall provide that the Cash
Management Bank shall remit to an account specified by Borrower, at the end of
each Business Day, the amount, if any, by which amounts then contained in the
Cash Management Account exceed the Peg Balance; PROVIDED, HOWEVER, that Lender
may terminate such remittances during the continuance of an Event of Default or
Cash Trap Period upon notice to the Cash Management Bank. Lender may notify the
Cash Management Bank at any time of any change in the Peg Balance.
(b) On each Payment Date, provided no Event of Default has
occurred and is continuing, Lender shall transfer amounts from the Cash
Management Account, to the extent available therein, to make the following
payments in the following order of priority:
(i) to the Tax and Insurance Reserve Account, the amounts then
required to be deposited therein pursuant to SECTION 3.4;
(ii) to Lender, the amount of all scheduled or delinquent interest
on the Loan and all other amounts then due and payable under the Loan
Documents;
(iii) during the continuance of a Cash Trap Period, to Borrower, the
amount payable by Borrower during the following 30-day period in respect of
Operating Expenses included in the Approved Annual Budget, to the extent
amounts previously distributed to Borrower under this clause (iii) and not
previously applied toward Operating Expenses are insufficient to make such
payments (as notified by Borrower to Lender in writing at least five
Business Days prior to such Payment Date), PROVIDED that the aggregate
amount remitted to Borrower under this clause (iii) in any Fiscal Year
shall not exceed the Budgeted Annual Operating Expense Amount, and PROVIDED
FURTHER that the amounts disbursed to Borrower pursuant to this clause
(iii) shall be used by Borrower solely to pay Operating Expenses included
in the Approved Annual Budget;
(iv) during the continuance of a Cash Trap Period, to the Capital
Reserve Account, the amounts required to be deposited therein pursuant to
SECTION 3.6(b), plus any additional amount payable by Borrower during the
following 30-day period in respect of Capital Expenditures included in the
Approved Annual Budget, to the extent amounts available in the Capital
Reserve Account are insufficient to make such payments (as notified by
Borrower to Lender in writing at least five Business Days prior to such
Payment Date), PROVIDED that the aggregate amount remitted to the Capital
Reserve Account under this clause (iv) in any Fiscal Year shall not exceed
the Budgeted Annual Capital Expenditure Amount, and PROVIDED FURTHER that
the amounts disbursed to the Capital Reserve Account pursuant to this
clause (iv) shall be used by Borrower solely to pay Capital Expenditures
included in the Approved Annual Budget;
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(v) during the continuance of a Cash Trap Period, to the TI/LC
Reserve Account, any amount required to be deposited therein pursuant to
SECTION 3.5;
(vi) during the continuance of a Cash Trap Period, all remaining
amounts to the Cash Trap Account; and
(vii) if no Cash Trap Period is continuing, all remaining amounts
("EXCESS CASH FLOW") to such accounts as Borrower may direct.
(c) If on any Payment Date the amount in the Cash Management
Account shall be insufficient to make all of the transfers required by SECTION
3.2(b)(i) through (v), as applicable, Borrower shall deposit into the Cash
Management Account on such Payment Date the amount of such deficiency. If
Borrower shall fail to make such deposit, the same shall constitute an Event of
Default and, in addition to all other rights and remedies provided for under the
Loan Documents, Lender may disburse and apply the amounts in the Cash Management
Account toward the components of the Indebtedness (E.G., interest, principal and
other amounts payable hereunder), the Loan and the Note Components in such
sequence as Lender shall elect in its sole discretion. If on any Payment Date
the amount in the Cash Management Account shall be sufficient at 1:00 p.m.,
New
York City time, to make all of the transfers required by SECTION 3.2(b)(i)
through (v), as applicable, the Borrower shall be deemed to have paid such
amounts on such Payment Date unless the Lender is legally constrained from
transferring such amount or causing such amount to be transferred in accordance
with SECTION 3.2(b) by reason of any insolvency related to the Borrower or any
other event.
3.3 CASH TRAP ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the deposit of
amounts required to be deposited therein in accordance with SECTION 3.2(b)(vi)
(the "CASH TRAP ACCOUNT"), which may be a subaccount of the Cash Management
Account.
(b) In the event that on any Payment Date during the continuance
of a Cash Trap Period, (i) Actual NOI for the most recently ended Test Period
shall be less than 65% of Closing Date NOI or (ii) following a Terrorism Event,
Lender may, as it elects in its sole discretion, apply any and all amounts then
on deposit in the Cash Trap Account to prepay the Loan, without prepayment
premium or penalty, which prepayment shall be applied in accordance with SECTION
2.1(b).
(c) Lender shall release to the Cash Management Account all
amounts then contained in the Cash Trap Account on the first Payment Date after
Borrower delivers to Lender evidence reasonably satisfactory to Lender
establishing that no Cash Trap Period is then continuing. Such a release shall
not preclude the subsequent commencement of a Cash Trap Period and the deposit
of amounts into the Cash Trap Account as set forth in SECTION 3.2(b)(vi).
3.4. TAX AND INSURANCE ESCROW ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts
32
payable by Borrower in respect of Taxes and insurance premiums (the "TAX AND
INSURANCE ESCROW ACCOUNT"), which may be a subaccount of the Cash Management
Account.
(b) On the Closing Date, the Borrower shall deposit into the Tax
and Insurance Escrow Account an amount equal to the sum of (i) an amount
sufficient to pay all Taxes by the 30th day prior to the date they come due,
assuming subsequent monthly fundings on Payment Dates of 1/12 of projected
annual Taxes, PLUS (ii) an amount sufficient to pay all insurance premiums by
the 30th day prior to the date they come due, assuming subsequent monthly
fundings on Payment Dates of 1/12 of projected insurance premiums.
(c) On each subsequent Payment Date, an additional deposit shall
be made therein in an amount equal to the sum of:
(A) 1/12 of the Taxes that Lender reasonably estimates, based on
information provided by Borrower, will be payable during the next ensuing
12 months, PLUS
(B) 1/12 of the insurance premiums that Lender reasonably
estimates, based on information provided by Borrower, will be payable
during the next ensuing 12 months;
PROVIDED, HOWEVER, that if at any time Lender reasonably determines that the
amount in the Tax and Insurance Escrow Account will not be sufficient to
accumulate (upon payment of subsequent monthly amounts in accordance with the
provisions of this Agreement) the full amount of all installments of Taxes and
insurance premiums by the date on which such amounts come due, then Lender shall
notify Borrower of such determination and Borrower shall increase its monthly
payments to the Tax and Insurance Escrow Account by the amount that Lender
reasonably estimates is sufficient to achieve such accumulation.
(d) Borrower shall provide Lender with copies of all tax and
insurance bills relating to the Property promptly after Borrower's receipt
thereof. Lender will apply amounts in the Tax and Insurance Escrow Account
toward the purposes for which such amounts are deposited therein. In connection
with the making of any payment from the Tax and Insurance Escrow Account, Lender
may cause such payment to be made according to any ▇▇▇▇, statement or estimate
procured from the appropriate public office or insurance carrier, without
inquiry into the accuracy of such ▇▇▇▇, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof unless given written advance notice by Borrower of such inaccuracy,
invalidity or other contest.
(e) Notwithstanding the terms and provisions of this SECTION 3.4,
in the event that and for so long as Borrower has provided, upon request of
Lender, evidence reasonably satisfactory to Lender that (i) the insurance escrow
account described in Section 1(d) of Article VI of the REA (the "REA INSURANCE
ESCROW ACCOUNT") is being maintained and (ii) Borrower and each of the other
parties to the REA required to make deposits into the REA Insurance Escrow
Account are doing so in accordance therewith, in lieu of the reserve for
insurance premiums provided in this SECTION 3.4, Borrower shall instead make the
deposits to the REA Insurance Escrow Account in accordance with the applicable
provisions of the REA, PROVIDED that (v) Borrower shall cause the trustee
maintaining the REA Insurance Escrow Account to
33
select an Eligible Account to serve such purpose, (w) Borrower shall have
granted to the trustee of the REA Insurance Escrow Account for the benefit of
Lender a first priority security interest in the REA Insurance Escrow Account,
(x) any documents or agreements relating to the establishment and administration
of the REA Insurance Escrow Account shall provide that such account is held by
the trustee for the benefit of Lender, (y) Borrower shall do all things
reasonably necessary in order to perfect the trustee's first priority security
interest, for the benefit of Lender, in such account, and (z) Borrower shall
have complied with the requirements set forth in the last sentence of SECTION
5.15(c). In the event Borrower shall fail to deliver reasonably satisfactory
evidence of the maintenance of the REA Insurance Escrow Account to Lender in
accordance with the foregoing sentence or the REA Insurance Escrow Account shall
no longer be maintained, the provisions of this SECTION 3.4(e) shall be of no
further force and effect until such evidence is delivered or such account is
once again maintained.
3.5. TI/LC RESERVE ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts in respect of Tenant Improvements and Leasing Commissions
during the continuance of a Cash Trap Period (the "TI/LC RESERVE ACCOUNT"),
which may be a subaccount of the Cash Management Account.
(b) On each Payment Date during the continuance of a Cash Trap
Period, there shall be deposited into the TI/LC Reserve Account an amount equal
to the Monthly TI/LC Amount.
(c) Upon the request of Borrower at any time that no Event of
Default is continuing (but not more often than once per calendar month), Lender
shall cause disbursements to Borrower from the TI/LC Reserve Account to
reimburse Borrower for Leasing Commissions and Tenant Improvement costs incurred
by Borrower in connection with a Lease (or Lease extension) entered into in
accordance herewith, PROVIDED that:
(i) Borrower shall deliver to Lender invoices evidencing that the
costs for which such disbursements are requested are due and payable or
will be due and payable within 30 days thereafter;
(ii) Borrower shall deliver to Lender an Officer's Certificate
confirming that all such costs have been previously paid by Borrower or
will be paid from the proceeds of the requested disbursement; and
(iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses
to which specific draws made hereunder relate, (2) a reasonably
satisfactory site inspection, and (3) receipt of reasonably requested lien
releases and waivers from any contractors, subcontractors and others with
respect to such amounts.
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(d) During the continuance of a Cash Trap Period or Deemed Cash
Trap Period, whenever a Lease is terminated, whether by buy-out, cancellation,
default or otherwise, and Borrower receives any payment (including retention of
any security deposit or portion thereof, and all interest thereon), fee or
penalty in respect of such termination (a "TERMINATION FEE"), Borrower shall
promptly cause such Termination Fee to be deposited into the TI/LC Reserve
Account. Provided no Event of Default has occurred and is continuing, Lender
shall disburse such Termination Fee to Borrower at the written request of
Borrower in respect of Leasing Commissions and Tenant Improvement costs incurred
by Borrower in connection with a replacement Lease entered into in accordance
with the terms of this Agreement in respect of the space covered by such
terminated Lease and the remainder of such Termination Fee, if any, shall be
remitted to the Cash Management Account after the space covered by such
terminated Lease has been relet and the replacement Tenant is in occupancy and
has commenced paying rent under the replacement Lease.
(e) Provided no Cash Trap Period or Deemed Cash Trap Period is
then continuing, Borrower may, at its option, deposit Termination Fees into the
TI/LC Reserve Account. Provided no Event of Default has occurred and is
continuing, Lender shall disburse to Borrower (i) on each Payment Date, the
amortized portion of such Termination Fee for the calendar month in which such
Payment Date falls, (ii) upon written request of Borrower, amounts in respect of
Tenant Improvement costs or Leasing Commissions incurred by Borrower in
connection with a Lease, and/or (iii) upon written request of Borrower, all or
any portion of such Termination Fee then on deposit in the TI/LC Account.
(f) Upon the termination of a Cash Trap Period or Deemed Cash Trap
Period (giving pro-forma effect to any replacement lease(s) executed at or prior
to the applicable date of determination), and provided no Event of Default is
then continuing, Lender shall remit to Borrower the amount then contained in the
TI/LC Reserve Account.
3.6. CAPITAL RESERVE ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
reserving amounts in respect of Capital Expenditures during the continuance of a
Cash Trap Period (the "CAPITAL RESERVE ACCOUNT"), which may be a subaccount of
the Cash Management Account.
(b) On each Payment Date during the continuance of a Cash Trap
Period, there shall be deposited into the Capital Reserve Account an amount
equal to the Monthly Capital Reserve Amount.
(c) Upon the request of Borrower at any time that no Event of
Default is continuing (but not more often that once per calendar month, except
in respect of emergency Capital Expenditures for which Borrower has delivered to
Lender a written request accompanied by a reasonably detailed description of the
emergency), Lender will cause disbursements to Borrower from the Capital Reserve
Account to reimburse Borrower for Capital Expenditures; PROVIDED that:
35
(i) Borrower shall deliver to Lender invoices evidencing that the
costs for which such disbursements are requested are due and payable or
will be due and payable within 30 days thereafter;
(ii) Borrower shall deliver to Lender an Officer's Certificate
confirming that all such costs have been previously paid by Borrower or
will be paid from the proceeds of the requested disbursement; and
(iii) Lender may condition the making of a requested disbursement on
(1) reasonable evidence establishing that Borrower has applied any amounts
previously received by it in accordance with this Section for the expenses
to which specific draws made hereunder relate, (2) a reasonably
satisfactory site inspection, and (3) receipt of reasonably requested lien
releases and waivers from any contractors, subcontractors and others with
respect to such amounts.
(d) Upon the termination of a Cash Trap Period, provided no Event
of Default is then continuing, Lender shall remit to Borrower the amount then
contained in the Capital Reserve Account.
3.7. [Reserved].
3.8. LOSS PROCEEDS ACCOUNT.
(a) On or prior to the Closing Date, Borrower shall establish and
thereafter maintain with the Cash Management Bank an account for the purpose of
depositing any Loss Proceeds (the "LOSS PROCEEDS ACCOUNT "), which may be a
subaccount of the Cash Management Account.
(b) Provided no Event of Default is continuing, funds in the Loss
Proceeds account shall be applied in accordance with SECTION 5.16.
3.9. [Reserved].
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3.10. ACCOUNT COLLATERAL.
(a) Borrower hereby grants a perfected first-priority security
interest in favor of Lender in and to the Account Collateral as security for the
Indebtedness, together with all rights of a secured party with respect thereto.
Each Collateral Account shall be an Eligible Account under the sole dominion and
control of Lender and shall be in the name of Borrower, as pledgor, and Lender,
as pledgee. Borrower shall have no right to make withdrawals from any of the
Collateral Accounts. Funds in the Collateral Accounts shall not be commingled
with any other monies at any time. Borrower shall execute any additional
documents that Lender in its reasonable discretion may require and shall provide
all other evidence reasonably requested by Lender to evidence or perfect its
first-priority security interest in the Account Collateral.
(b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve Borrower from its obligation to fulfill all covenants
contained in the Loan Documents.
(c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, either toward the components of the Indebtedness (e.g., interest,
principal and other amounts payable hereunder), the Loan and the Note Components
in such sequence as Lender shall elect in its sole discretion, and/or toward the
payment of Taxes, Operating Expenses and Capital Expenditures.
3.11. PERMITTED INVESTMENTS.
(a) So long as no Event of Default shall be continuing, Borrower
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts in Permitted Investments and to sell or liquidate
such Permitted Investments and reinvest proceeds from such sale or liquidation
in other Permitted Investments (but Lender shall have no liability whatsoever in
respect of any failure by the Cash Management Bank to do so), with all such
proceeds and reinvestments to be held in the applicable Collateral Account;
PROVIDED, HOWEVER, that the maturity of an adequate portion of the Permitted
Investments on deposit in the Collateral Accounts shall be no later than the
Business Day immediately preceding the date on which such funds are required to
be withdrawn therefrom pursuant to this Agreement. No Permitted Investment shall
be liquidated at a loss at the direction of Borrower except to the extent
necessary to make a required payment to Lender on a Payment Date.
(b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrower and Lender, Borrower shall treat all income,
gains and losses from the investment of amounts in the Collateral Accounts as
its income or loss for federal, state and local income tax purposes.
(c) After the Loan and all other Indebtedness have been paid in
full, the Collateral Accounts shall be closed and the balances therein, if any,
shall be paid to Borrower.
37
3.12. BANKRUPTCY. Borrower and Lender acknowledge and agree that upon
the filing of a bankruptcy petition by or against Borrower under the Bankruptcy
Code, the Account Collateral and the Revenues (whether then already in the
Collateral Accounts, or then due or becoming due thereafter) shall be deemed not
to be property of Borrower's bankruptcy estate within the meaning of Section 541
of the Bankruptcy Code. However, if a court of competent jurisdiction determines
that, notwithstanding the foregoing characterization of the Account Collateral
and the Revenues by Borrower and Lender, the Account Collateral and/or the
Revenues do constitute property of Borrower's bankruptcy estate, then Borrower
and Lender hereby further acknowledge and agree that all such Revenues, whether
due and payable before or after the filing of the petition, are and shall be
cash collateral of Lender. Borrower acknowledges that Lender does not consent to
Borrower's use of such cash collateral and that, in the event Lender elects (in
its sole discretion) to give such consent, such consent shall only be effective
if given in writing signed by Lender. Except as provided in the immediately
preceding sentence, Borrower shall not have the right to use or apply or require
the use or application of such cash collateral (i) unless Borrower shall have
received a court order authorizing the use of the same, and (ii) Borrower shall
have provided such adequate protection to Lender as shall be required by the
bankruptcy court in accordance with the Bankruptcy Code.
ARTICLE IV
REPRESENTATIONS
Borrower represents to Lender that, as of the Closing Date, except as
set forth in the Exception Report:
4.1. ORGANIZATION.
(a) Borrower is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is in good standing as a foreign limited liability company in each other
jurisdiction where ownership of its properties or the conduct of its business
requires it to be so, and Borrower has all power and authority under such laws
and its organizational documents and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
(b) Borrower Managing Member is a Nevada corporation, validly
existing and in good standing under the laws of the State of Nevada, and
Borrower Managing Member has all corporate power and authority under such laws
and its organizational documents and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
(c) Borrower has no subsidiaries and does not own any equity
interest in any other Person.
4.2. AUTHORIZATION. Borrower has the power and authority to enter
into this Agreement and the other Loan Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by the
Loan Documents and has by proper action duly authorized the execution and
delivery of the Loan Documents.
38
4.3. NO CONFLICTS. Neither the execution and delivery of the Loan
Documents, nor the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof will (i)
violate or conflict with any provision of its operating agreement, certificate
of formation or other governance document, (ii) violate any law, regulation
(including Regulation U, Regulation X or Regulation T), order, writ, judgment,
injunction, decree or permit applicable to it, (iii) violate or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, contract or other Material Agreement to which Borrower
or Sponsor is a party or by which Borrower or Sponsor may be bound, or (iv)
result in or require the creation of any Lien upon or with respect to the
Collateral in favor of any party other than Lender.
4.4. CONSENTS. No consent, approval, authorization or order of, or
qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by Borrower of this
Agreement or the other Loan Documents, except for any of the foregoing which
have already been obtained.
4.5. ENFORCEABLE OBLIGATIONS. This Agreement and the other Loan
Documents have been duly executed and delivered by Borrower and constitute
Borrower's legal, valid and binding obligations, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The Loan Documents are not subject to any right of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury.
4.6. NO DEFAULT. No Default or Event of Default will exist
immediately following the making of the Loan.
4.7. PAYMENT OF TAXES. Borrower has filed, or caused to be filed,
all tax returns (federal, state, local and foreign) required to be filed and
paid all amounts of taxes due (including interest and penalties) except for
taxes which are not yet delinquent, or are being contested in good faith and by
appropriate proceedings with respect to which no Lien is in imminent danger of
foreclosure, and has paid all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangible taxes) owing by it necessary to preserve the Liens in favor
of Lender.
4.8. COMPLIANCE WITH LAW. Borrower, the Property and the use
thereof comply in all material respects with all applicable Insurance
Requirements and Legal Requirements, including building and zoning ordinances
and codes. The Property conforms to current zoning requirements and is neither
an illegal nor a legal nonconforming use. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority the violation of which could adversely affect the Property or the
condition (financial or otherwise) or business of Borrower. There has not been
committed by or on behalf of Borrower or, to the best of Borrower's knowledge,
any other person in occupancy of or involved with the operation or use of the
Property, any act or omission affording the federal Governmental Authority or
any state or local Governmental Authority the right of forfeiture as against the
Property or any portion thereof or any monies paid in performance of its
obligations under any of the Loan Documents. Neither Borrower nor Sponsor has
purchased any portion of the Property with proceeds of any illegal activity.
39
4.9. ERISA. Neither Borrower nor any ERISA Affiliate of Borrower
has incurred or could be subjected to any liability under Title IV or Section
302 of ERISA or Section 412 of the Code or maintains or contributes to, or is or
has been required to maintain or contribute to, any employee benefit plan (as
defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or
Section 412 of the Code. The consummation of the transactions contemplated by
this Agreement will not constitute or result in any non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under federal, state or local laws, rules or
regulations.
4.10. GOVERNMENT REGULATION. Borrower is not an "investment
company", or a company "controlled" by an "investment company", registered or
required to be registered under the Investment Company Act of 1940, as amended.
Borrower is not a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" or either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.11. NO BANKRUPTCY FILING. Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of its assets or property.
Borrower does not have knowledge of any Person contemplating the filing of any
such petition against it.
4.12. OTHER DEBT. Borrower does not have outstanding any Debt other
than Permitted Debt.
4.13. LITIGATION. There are no actions, suits, proceedings,
arbitrations or governmental investigations by or before any Governmental
Authority or other agency now pending, and to the best of Borrower's knowledge
there are no such actions, suits, proceedings, arbitrations or governmental
investigations threatened against or affecting Borrower or the Property, which
alone or in the aggregate are reasonably likely to result in a Material Adverse
Effect (and all such actions, suits, proceedings, arbitrations and governmental
investigations, regardless of materiality, are listed in the Exception Report;
however, none of such items alone or in the aggregate are reasonably likely to
result in a Material Adverse Effect).
4.14. LEASES; MATERIAL AGREEMENTS.
(a) Borrower has delivered to Lender true and complete copies of
all Leases. No person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases. The
rent roll attached to this Agreement as SCHEDULE E (the "RENT ROLL") is true and
correct in all material respects as of the date thereof. Except as indicated on
the Rent Roll, no security deposits are being held by Borrower, no Tenant has
any extension, renewal or termination options, no Tenant or other party has any
option, right of first refusal or similar preferential right to purchase or
lease all or any portion of the Property, no fixed rent has been paid more than
30 days in advance of its due date and no payments of rent are more than 30 days
delinquent.
(b) Except as indicated in SCHEDULE D, all work to be performed by
the landlord under the Leases has been substantially performed, all
contributions to be made by the
40
landlord to the Tenants thereunder have been made, all other conditions to each
Tenant's obligations thereunder required to be satisfied to the date hereof have
been satisfied, no Tenant has the right to require Borrower to perform or
finance Tenant Improvements or Material Alterations and no material Leasing
Commissions are owed or would be owed upon the exercise of any Tenant's existing
renewal or expansion options.
(c) There are no Material Agreements except as described in
SCHEDULE F. Borrower has made available to Lender true and complete copies of
all Material Agreements. Each Material Agreement has been entered into at arm's
length in the ordinary course of business by or on behalf of Borrower.
(d) The Leases and the Material Agreements are in full force and
effect and there are no defaults thereunder by Borrower or, to Borrower's best
knowledge, any other party thereto. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Property is
bound.
4.15. [Reserved.
4.16. FINANCIAL CONDITION. All financial data concerning Borrower
and the Property heretofore provided to Lender fairly presents in accordance
with GAAP the financial position of Borrower in all material respects, as of the
date on which it was made, and does not omit to state any fact necessary to make
statements contained herein or therein not misleading. Since the delivery of
such data, except as otherwise disclosed in writing to Lender, there have
occurred no changes or circumstances in the Property's or Borrower's financial
condition or position which have had or are reasonably likely to result in a
Material Adverse Effect.
4.17. SINGLE-PURPOSE REQUIREMENTS. Each of Borrower and Borrower
Managing Member is now, and has always been since its formation, a
Single-Purpose Entity.
4.18. LOCATION OF CHIEF EXECUTIVE OFFICES. The location of
Borrower's principal place of business and chief executive office is the address
listed in SECTION 9.4.
4.19. NOT FOREIGN PERSON. Borrower is not a "FOREIGN PERSON" within
the meaning of Section 1445(f)(3) of the Code.
4.20. LABOR MATTERS. Borrower is not a party to any collective
bargaining agreements.
4.21. TITLE. Borrower owns good, marketable and insurable fee and
leasehold title, as applicable, in and to the Property and good and marketable
title to the related personal property, to the Collateral Accounts and to any
other Collateral, in each case free and clear of all Liens whatsoever except the
Permitted Encumbrances. The Deed of Trust, when properly recorded in the
appropriate records, together with the Assignment of Rents and Leases and any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first priority Lien on the
Property and the rents therefrom, enforceable as such against creditors of and
purchasers from Borrower and subject only to
41
Permitted Encumbrances, and (ii) perfected Liens (pursuant to the Uniform
Commercial Code of the State of Delaware) in and to all personalty, all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances. The Permitted Encumbrances do not and will not
materially and adversely affect or interfere with the value, or current use or
operation, of the Property, or the security intended to be provided by the Deed
of Trust or Borrower's ability to repay the Indebtedness in accordance with the
terms of the Loan Documents. Except as insured by a Qualified Title Insurance
Policy, there are no claims for payment for work, labor or materials affecting
the Property which are or may become a Lien prior to, or of equal priority with,
the Liens created by the Loan Documents. No creditor of Borrower other than
Lender has in its possession any goods that constitute or evidence the
Collateral.
4.22. NO ENCROACHMENTS. Except as shown on the Qualified Survey or
as permitted pursuant to the REA, (i) all of the improvements on the Property
lie wholly within the boundaries and building restriction lines of the Property,
(ii) no improvements on adjoining property encroach upon the Property, and (iii)
no easements or other encumbrances upon the Property encroach upon any of the
improvements, so as, in the case of each of clauses (i), (ii) and (iii), to
materially adversely affect the value or marketability of the Property, except
those which are insured against by a Qualified Title Insurance Policy.
4.23. PHYSICAL CONDITION.
(a) Except for matters set forth in the Engineering Reports, the
Property (including sidewalks, storm drainage system, roof, plumbing system,
HVAC system, fire protection system, electrical system, equipment, elevators,
exterior sidings and doors, irrigation system and all structural components) is
in good condition, order and repair in all respects material to its use,
operation or value.
(b) Borrower is not aware of any material structural or other
material defect or damages in the Property, whether latent or otherwise.
(c) Borrower has not received and is not aware of any other
party's receipt of notice from any insurance company or bonding company of any
defects or inadequacies in the Property which would, alone or in the aggregate,
adversely affect in any material respect the insurability of the same or cause
the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.
4.24. FRAUDULENT CONVEYANCE. Borrower has not entered into the
Transaction or any of the Loan Documents with the actual intent to hinder, delay
or defraud any creditor. Borrower has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. On the Closing Date, the
fair salable value of Borrower's aggregate assets is and will, immediately
following the making of the Loan and the use and disbursement of the proceeds
thereof, be greater than Borrower's probable aggregate liabilities (including
subordinated, unliquidated, disputed and Contingent Obligations). Borrower's
aggregate assets do not and, immediately following the making of the Loan and
the use and disbursement of the proceeds thereof will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe
42
that it will, incur debts and liabilities (including Contingent Obligations and
other commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts to be payable on or in respect of
obligations of Borrower).
4.25. MANAGEMENT. Except for any Approved Management Agreement,
no property management agreements are in effect with respect to the Property.
4.26. CONDEMNATION. No Condemnation has been commenced or, to
Borrower's actual knowledge, is contemplated with respect to all or any material
portion of the Property or for the relocation of roadways providing access to
the Property.
4.27. UTILITIES AND PUBLIC ACCESS. The following statements are
accurate in all material respects:
(i) The Property has adequate rights of access to dedicated public
ways (and makes no material use of any means of access or egress that is
not pursuant to such dedicated public ways or recorded, irrevocable
rights-of-way or easements) and is adequately served pursuant to the ESA
and/or by all public utilities necessary to the continued use and enjoyment
of the Property as presently used and enjoyed.
(ii) All public utilities necessary to the continued use and
enjoyment of the Property as presently used and enjoyed are located in the
public right-of-way abutting the premises or in areas ("EASEMENT AREAS")
that are the subject of recorded irrevocable easement agreements which
benefit the Property and which are listed in Schedule A of the Qualified
Title Insurance Policy so as to be included in the coverage thereof.
(iii) All such utilities are connected so as to serve the Property
without passing over other property other than Easement Areas.
(iv) All roads necessary for the full utilization of the Property
for its current purpose have been completed and are either part of the
Property (by way of deed, easement or ground lease) or dedicated to public
use and accepted by all Governmental Authorities.
4.28. ENVIRONMENTAL MATTERS. Except as disclosed in the
Environmental Reports:
(i) The Property is in compliance in all material respects with
all Environmental Laws applicable to the Property (which compliance
includes, but is not limited to, the possession of, and compliance with, in
all material respects, all environmental, health and safety permits,
approvals, licenses, registrations and other governmental authorizations
required in connection with the ownership and operation of the Property
under all Environmental Laws).
(ii) No Environmental Claim is pending with respect to the
Property, nor, to Borrower's knowledge, is any threatened, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or
43
judicial requirements outstanding under any Environmental Law with respect
to Borrower or the Property.
(iii) Without limiting the generality of the foregoing, to the
Borrower's knowledge there is not present at, on, in or under the Property,
any Hazardous Substances, PCB-containing equipment, asbestos or asbestos
containing materials, underground storage tanks or surface impoundments for
any Hazardous Substance, lead in drinking water (except in concentrations
that comply with all Environmental Laws), or lead-based paint.
(iv) To Borrower's knowledge, there have not been and are no past,
present or threatened Releases of any Hazardous Substance from or at the
Property that are reasonably likely to form the basis of any Environmental
Claim, and, to Borrower's knowledge, there is no threat of any Release of
any Hazardous Substance migrating to the Property.
(v) No Liens are presently recorded with the appropriate land
records under or pursuant to any Environmental Law with respect to the
Property and, to Borrower's best knowledge, no Governmental Authority has
been taking any action to subject the Property to Liens under any
Environmental Law.
(vi) There have been no material environmental investigations,
studies, audits, reviews or other analyses conducted by or that are in the
possession of Borrower in relation to the Property which have not been made
available to Lender.
4.29. ASSESSMENTS. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting the Property, nor are there any contemplated improvements to the
Property that may result in such special or other assessments. No extension of
time for assessment or payment by Borrower of any federal, state or local tax is
in effect.
4.30. NO JOINT ASSESSMENT. Borrower has not suffered, permitted or
initiated the joint assessment of the Property (i) with any other real property
constituting a separate tax lot, or (ii) with any personal property, or any
other procedure whereby the Lien of any Taxes which may be levied against such
other real property or personal property shall be assessed or levied or charged
to the Property as a single Lien.
4.31. SEPARATE LOTS. No portion of the Property is part of a tax lot
that also includes any real property that is not Collateral.
4.32. PERMITS; CERTIFICATE OF OCCUPANCY. Borrower has obtained all
material Permits necessary for the present and contemplated use and operation of
the Property. The uses being made of the Property are in conformity in all
material respects with the certificate of occupancy and/or Permits for the
Property and any other restrictions, covenants or conditions affecting the
Property.
4.33. FLOOD ZONE. None of the Improvements on the Property is
located in an area identified by the Federal Emergency Management Agency or the
Federal Insurance
44
Administration as having special flood hazards (Zone A), and, to the extent that
any portion of the Property is located in an area identified by the Federal
Emergency Management Agency as a "100 YEAR FLOOD PLAIN," the Property is covered
by flood insurance meeting the requirements set forth in SECTION 5.15(a)(ii).
4.34. SECURITY DEPOSITS. Borrower is in compliance in all material
respects with all Legal Requirements relating to security deposits.
4.35. CERTAIN AGREEMENTS. Neither the Borrower nor, to the
Borrower's knowledge, any other party thereto, is in default under the REA, the
ESA or any Master Lease.
4.36. INSURANCE. Borrower has obtained insurance policies reflecting
the insurance coverages, amounts and other requirements set forth in this
Agreement. All premiums on such insurance policies required to be paid as of the
Closing Date have been paid for the current policy period. No Person, including
Borrower, has done, by act or omission, anything which would impair the coverage
of any such policy.
4.37. MASTER LEASES. With respect to each Master Lease, each of the
following is true or has been waived by Lender in writing following Lender's
receipt of Rating Confirmation with respect thereto:
(i) a true and complete copy of such Master Lease has been
delivered to Lender, and such Master Lease or a memorandum thereof has been
duly recorded;
(ii) such Master Lease permits the interest of the lessee
thereunder to be encumbered by the Deed of Trust and does not restrict the
use of the Property by such lessee, its successors or assigns in a manner
that would cause a Material Adverse Effect;
(iii) such Master Lease may not be amended, modified, cancelled or
terminated without the prior written consent of Lender, and any such action
without such consent is void;
(iv) such Master Lease has an original term which expires one day
after the termination of the underlying Lease;
(v) the base rental payable to lessor under such Master Lease is
subject to increase and is based on a percentage of percentage rent or a
percentage of base and percentage rent in each case payable by the Tenant
under the underlying Lease;
(vi) such Master Lease is not subject to any liens or encumbrances
superior to, or of equal priority with, the Deed of Trust (other than the
related lessor's fee interest);
(vii) such Master Lease shall remain prior to any Lien upon the
related fee interest now existing or that may hereafter be granted;
(viii) such Master Lease is assignable by a holder of a mortgage
encumbering the lessee's interest therein upon a foreclosure of such
mortgage without the consent of the lessor thereunder;
45
(ix) such Master Lease is in full force and effect and no default
has occurred thereunder nor, to Borrower's knowledge, is there any existing
condition which, but for the passage of time or the giving of notice or
both, would result in a default under the terms of such Master Lease;
(x) such Master Lease requires the lessor thereunder to give
notice of any default by the lessee to a holder of a mortgage encumbering
the lessee's interest therein; and such Master Lease further provides that
no notice given thereunder is effective against such holder, unless a copy
has been given to such holder in the manner described in such Master Lease;
(xi) such Master Lease contains no restrictions on the identity of
a leasehold mortgagee;
(xii) a holder of a mortgage encumbering the lessee's interest
therein is permitted at least 30 days in addition to Borrower's applicable
cure period to cure any default under such Master Lease which is curable
after the receipt of notice of any such default before the lessor
thereunder may terminate such Master Lease (and, where necessary, is
permitted the opportunity to gain possession of the interest of the lessee
under such Master Lease through legal proceedings or to take other action
so long as such holder is proceeding diligently);
(xiii) in the case of any default which is not curable by a holder of
a deed of trust or mortgage encumbering the lessee's interest therein, or
in the event of the bankruptcy or insolvency of the lessee under such
Master Lease, such holder has the right, following termination of the
existing Master Lease or rejection thereof by a bankruptcy trustee or
similar party, to enter into a new lease with the lessor on the same terms
as the existing Master Lease, and all rights of the lessee under such
Master Lease may be exercised by or on behalf of such holder; and
(xiv) such Master Lease does not impose any restrictions on
subletting.
4.38. SURVIVAL. Borrower agrees that all of the representations of
Borrower set forth in this Agreement and in the other Loan Documents shall
survive for so long as any portion of the Indebtedness is outstanding. All
representations, covenants and agreements made by Borrower in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf. On the date of any Securitization, on not less than five Business
Days' prior written notice, Borrower shall deliver to Lender a certification (x)
confirming that all of the representations contained in this Agreement are true
and correct in all material respects as of the date of such Securitization, or
(y) otherwise specifying any changes in or qualifications to such
representations as of such date as may be necessary to make such representations
consistent with the facts as they exist on such date.
4.39. AFFILIATE TRANSACTIONS. Other than the REA (and the
transactions and arrangements required thereunder) and the Master Leases,
Borrower is not a party to any transaction with any Affiliate of Borrower,
except on terms which are no less favorable to
46
Borrower than would be obtained in a comparable arm's length transaction with an
unrelated third party.
ARTICLE V
AFFIRMATIVE COVENANTS
5.1. EXISTENCE. Borrower shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence as
a limited liability company and all rights, licenses, Permits, franchises and
other agreements necessary for the continued use and operation of its business.
Borrower shall deliver to Lender a copy of each amendment or other modification
to any of its organizational documents promptly after the execution thereof.
5.2. MAINTENANCE OF PROPERTY; COMPLIANCE WITH LEGAL REQUIREMENTS.
Borrower will keep the Property in good working order and repair, reasonable
wear and tear excepted. Subject to SECTION 6.13, Borrower shall from time to
time make, or cause to be made, all reasonably necessary and desirable repairs,
renewals, replacements, betterments and improvements thereto. Borrower shall
comply with, and shall cause the Property to comply with and be operated,
maintained, repaired and improved in compliance in all material respects with,
all Legal Requirements and Insurance Requirements.
5.3. IMPOSITIONS AND OTHER CLAIMS. Borrower shall pay and discharge
all taxes, assessments and governmental charges levied upon it, its income and
its assets as and when such taxes, assessments and charges are due and payable,
as well as all lawful claims for labor, materials and supplies or otherwise,
subject to any rights to contest contained in the definition of Permitted
Encumbrances (whether or not there is an applicable Lien). Borrower shall file
all federal, state and local tax returns and other reports that it is required
by law to file. If any law or regulation applicable to Lender, any Note, the
Property or the Deed of Trust is enacted that deducts from the value of property
for the purpose of taxation any Lien thereon or imposes upon Lender the payment
of the whole or any portion of the taxes or assessments or charges or Liens
required in this Agreement to be paid by Borrower or changes in any way the laws
or regulations relating to the taxation of mortgages or security agreements or
debts secured by mortgages or security agreements or the interest of the
mortgagee or secured party in the property covered thereby, or the manner of
collection of such taxes, so as to affect the Deed of Trust, the Indebtedness or
Lender, then Borrower, upon demand by Lender, shall pay such taxes, assessments,
charges or Liens, or reimburse Lender for any amounts paid by Lender. If in the
opinion of Lender's counsel it might be unlawful to require Borrower to make
such payment or the making of such payment might result in the imposition of
interest beyond the maximum amount permitted by applicable Law, Lender may elect
to declare all of the Indebtedness to be due and payable (without any premium or
penalty) 90 days from the giving of written notice by Lender to Borrower.
5.4. ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Lender and the Servicer to inspect the Property
or any portion thereof, and/or the books and records of Borrower, at such
reasonable times as may be requested by Lender upon
47
reasonable advance notice so long as such access does not materially interfere
with any Tenant at the Property and is in compliance with applicable Leases.
5.5. NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
the occurrence to the best of Borrower's knowledge of any Default or Event of
Default.
5.6. LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened in
writing against Borrower which is reasonably likely to have a Material Adverse
Effect.
5.7. COOPERATE IN LEGAL PROCEEDINGS. Except with respect to any
claim by Borrower against Lender, Borrower shall cooperate fully with Lender
with respect to any proceedings before any Governmental Authority which may in
any way affect the rights of Lender hereunder or under any of the Loan Documents
and, in connection therewith, Lender may, at its election, participate or
designate a representative to participate in any such proceedings.
5.8. LEASES.
(a) Borrower shall furnish Lender with executed copies of all
Leases. A new Lease which is not a Major Lease, a renewal and extension or
amendment of a Lease which is not a Major Lease, shall not require Lender's
approval, PROVIDED (i) the rent and other amounts payable thereunder, based upon
the location of the demised premises, the type of property, and the tenant
improvements, allowances or concessions to be made or provided by the landlord
thereunder (taken as a whole) are "market" rate as determined by Borrower in
good faith, and (ii) the other proposed terms thereof (taken as a whole) are
Commercially Reasonable as determined by Borrower in good faith. Lender hereby
agrees that the terms and provisions of Borrower's standard forms of Lease
attached hereto as EXHIBIT D (collectively, the "STANDARD LEASE FORM") without
material deviation (defined for these purposes as a deviation that would likely
be objectionable to a prudent institutional lender) are Commercially Reasonable.
Subject to the provisions of the next sentence, all new Leases must provide that
they are subject and subordinate to any current or future mortgage financing on
the Property and that the Tenant agrees to attorn to any foreclosing mortgagee
at such mortgagee's request. Lender agrees to execute subordination,
non-disturbance and attornment agreements on the form attached hereto as EXHIBIT
E (with such changes as reasonably approved by Lender), or, if required under
the applicable Lease, any other form reasonably satisfactory to Lender, with
respect to any Lease as to which a subordination, non-disturbance and attornment
agreement is required to be delivered by Lender, either as an obligation of
Borrower under such Lease or in order to effect the subordination of such Lease
and the agreement to attorn by the related Tenant.
(b) All new Leases which are Major Leases or are Leases that do
not comply with the second sentence of SECTION 5.8(a), all terminations (other
than terminations arising from an event of default by tenant under the terms of
the applicable Lease), extensions, renewals and material amendments of Major
Leases, any surrender of rights under any Major Lease and any material amendment
to the Standard Lease Form shall be subject to the prior written consent of
Lender, which consent shall not be unreasonably withheld, conditioned or delayed
(and all other new Leases or terminations, extensions, renewals and amendments
of Leases shall not require
48
Lender's prior written consent), it being agreed by Lender that Lender's
approval shall not be withheld with respect to a proposed Major Lease unless (i)
the rent and other amounts payable under such proposed Major Lease, based upon
the location of the demised premises, the type of property, the tenant
improvements, allowances and concessions to be made or provided by the landlord
under such proposed Major Lease (taken as a whole), is not at "market" rates, or
(ii) the proposed terms of such proposed Major Lease (taken as a whole and in
context with the items described in clause (i) of this sentence) are not
Commercially Reasonable. In addition, Lender's approval of any extension or
renewal of a Major Lease (whether such extension or renewal is by way of a
modification of a Tenant's existing Lease or by way of a new Lease with such
Tenant) shall not be required if such extension or renewal is at a "market" rent
or the rent otherwise required pursuant to the terms of such Tenant's existing
Lease and the other terms of such extended or renewed Lease are the same or
better in all material respects than those contained in such Tenant's existing
Lease.
(c) Each request for approval of a Lease shall be submitted to
Lender and shall prominently include a statement in capital letters "URGENT -
LENDER'S ATTENTION REQUIRED WITHIN 10 BUSINESS DAYS", together with (i) a copy
of the proposed Lease, (ii) a summary of the economic terms thereof and any
termination options contained therein, and (iii) copies of all written materials
obtained by Borrower in connection with its evaluation of the creditworthiness
of the proposed Tenant, or, with respect to a proposed termination, a
description of the reason therefor (the foregoing items (i) through (iii) being
collectively, the "LEASE APPROVAL MATERIALS"), and shall be deemed approved if
Lender shall not have notified the Borrower in writing of its disapproval
thereof and the reasons for such disapproval within 10 Business Days after its
receipt of the Lease Approval Materials. Borrower may also request, pursuant to
the procedure described in the preceding sentence, Lender's approval of the rent
and other amounts payable by the proposed Tenant and Borrower, including tenant
allowances and rent concessions, under a proposed Lease and the identity of the
proposed Tenant (and any guarantor) and any other material terms of such Lease
(collectively, the "PROPOSED LEASE TERMS") even if the form of the proposed
Lease is not yet available for Lender's review, provided that the approval or
deemed approval of the Proposed Lease Terms shall not constitute Lender's
approval of such Lease (except with respect to the Proposed Lease Terms), and
when the proposed Lease becomes available Borrower shall be required to submit
it for Lender's approval in accordance with the procedure described in the
preceding sentence, except that Lender's approval shall not be required if
Borrower delivers to Lender an Officer's Certificate certifying that the final
proposed Lease is consistent, in all material respects, with the Standard Lease
Form, and the Proposed Lease terms previously approved (or deemed approved) by
Lender. If Lender shall have previously consented or been deemed to have
consented to the Proposed Lease Terms under such proposed Lease, Lender's
approval of such proposed Lease shall not be withheld unless the other terms of
such proposed Lease, taken as a whole (and in the context of the already
approved Proposed Lease Terms), are not Commercially Reasonable.
(d) Borrower shall (i) deliver to each new Tenant a Tenant Notice
upon execution of such Tenant's Lease, and promptly thereafter deliver to Lender
a copy thereof and evidence of such Tenant's receipt thereof; (ii) observe and
perform all the material obligations imposed upon the lessor under the Leases;
(iii) enforce in a commercially reasonable manner as determined by Borrower in
good faith all of the material terms, covenants and conditions contained in the
Leases on the part of the lessee thereunder to be observed or performed, short
of
49
termination thereof, except that Borrower may terminate any Lease following a
material default thereunder by the respective Tenant; (iv) not collect any of
the rents thereunder more than one month in advance; (v) not execute any
assignment of lessor's interest in the Leases or associated rents other than the
Assignment of Rents and Leases; and (vi) not cancel or terminate any guarantee
of any of the Major Leases without the prior written consent of Lender not to be
unreasonably withheld.
(e) Security deposits of Tenants under all Leases, whether held in
cash or any other form, shall not be commingled with any other funds of Borrower
and, if cash, shall be deposited by Borrower at such commercial or savings bank
or banks as may be reasonably satisfactory to Lender and (to the extent of
Borrower's rights thereto) pledged to Lender. Any bond or other instrument which
Borrower is permitted to hold in lieu of cash security deposits under any
applicable Legal Requirements shall be maintained in full force and effect
unless replaced by cash deposits as described above, shall be issued by an
institution reasonably satisfactory to Lender, shall (if not prohibited by any
Legal Requirements) name Lender as payee or mortgagee thereunder (or at Lender's
option, be fully assignable to Lender) or may name Borrower as payee thereunder
so long as such bond or other instrument is (to the extent of Borrower's rights
thereto) pledged to Lender as security for the Indebtedness and shall, in all
respects, comply with any applicable Legal Requirements and otherwise be
reasonably satisfactory to Lender. Borrower shall, upon Lender's request,
provide Lender with evidence reasonably satisfactory to Lender of Borrower's
compliance with the foregoing. During the continuance of any Event of Default,
Borrower shall, upon Lender's request, deposit with Lender in an Eligible
Account pledged to Lender an amount equal to the aggregate security deposits of
the Tenants (and any interest theretofore earned on such security deposits and
actually received by Borrower) which Borrower has not theretofore returned to
the applicable Tenants or applied in accordance with the terms of the applicable
Lease, and Lender shall hold such security deposits in a segregated account in
accordance with the applicable Lease.
(f) Each of Borrower and Sponsor covenant and agree not to take
any action in respect of leasing efforts for adjacent retail properties owned by
Affiliates of the Borrower or Sponsor, or contemplated to be developed by
Affiliates of the Borrower or Sponsor, that would diminish or adversely affect
the leasing efforts at the Property.
5.9. PLAN ASSETS, ETC. Borrower will do, or cause to be done, all
things necessary to ensure that it will not be deemed to hold Plan Assets at any
time.
5.10. FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
and expense, from time to time as reasonably requested by Lender, execute,
acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including Uniform
Commercial Code financing statements and amended or replacement mortgages) as
Lender may reasonably request to evidence, confirm, perfect and maintain the
Liens securing or intended to secure the obligations of Borrower under the Loan
Documents or to facilitate a replacement of the Cash Management Bank pursuant to
SECTION 3.1(c) or a bifurcation of the Note pursuant to SECTIONS 1.3(c) and/or
9.7(a), in each case if reasonably requested by Lender, and do and execute all
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 request
50
from time to time. Borrower hereby authorizes and appoints Lender as its
attorney-in-fact to execute, acknowledge, record, register and/or file such
instruments, agreements, certificates and documents, and to do and execute such
acts, conveyances and assurances, should Borrower fail to do so itself in
violation of this Agreement following written request from Lender, in each case
without the signature of Borrower. The foregoing grant of authority is a power
of attorney coupled with an interest and such appointment shall be irrevocable
for the term of this Agreement. Borrower hereby ratifies all actions that such
attorney shall lawfully take or cause to be taken in accordance with this
SECTION 5.10.
5.11. MANAGEMENT OF COLLATERAL.
(a) The Property shall be managed at all times by an Approved
Property Manager pursuant to an Approved Management Agreement. Pursuant to the
Subordination of Property Management Agreement or Agreements, each Approved
Property Manager shall agree that its Approved Management Agreement, and all
fees thereunder (including any incentive fees), are subject and subordinate to
the Indebtedness. Borrower may from time to time appoint a successor manager,
which successor manager shall be an Approved Property Manager, to manage the
Property pursuant to an Approved Management Agreement, and such successor
manager shall execute for Lender's benefit a Subordination of Property
Management Agreement in form and substance reasonably satisfactory to Lender.
The fees of the Approved Property Manager (including any incentive fees) shall
not exceed market rates generally paid by owners of similar properties in the
applicable geographic market in which the Property is located.
(b) Borrower shall cause each Approved Property Manager (including
any successor Approved Property Manager) to maintain worker's compensation
insurance as required by Governmental Authorities.
(c) Borrower shall notify Lender in writing of any default of
Borrower or the Approved Property Manager under the Approved Management
Agreement, after the expiration of any applicable cure periods, of which
Borrower has actual knowledge. Lender shall have the right, after reasonable
notice to Borrower and in accordance with the Subordination of Management
Agreement, to cure defaults of Borrower under the Approved Management Agreement.
Any reasonable out-of-pocket expenses incurred by Lender to cure any such
default shall constitute a part of the Indebtedness and shall be due from
Borrower upon demand by Lender.
(d) Upon the occurrence and during the continuance of an Event of
Default, Lender may, in its sole discretion, require, Borrower to terminate the
Approved Management Agreement and engage an Approved Property Manager selected
by Lender to serve as replacement Approved Property Manager pursuant to an
Approved Management Agreement. Following a default by the Approved Property
Manager under the Approved Management Agreement that is reasonably likely to
result in a Material Adverse Effect and after the expiration of any applicable
cure period, Lender may, in its reasonable discretion, require Borrower to
terminate the Approved Management Agreement and engage an Approved Property
Manager selected by Lender that is not one of the entities listed on Schedule J
hereto (or, at Borrower's option, selected by Borrower and reasonably approved
by Lender) to serve as replacement Approved Property Manager pursuant to an
Approved Management Agreement.
51
5.12. ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any
event within 120 days after the close of each Fiscal Year, Borrower shall
furnish to Lender, in hard copy and, if available, electronic format, a balance
sheet of Borrower as of the end of such year, together with related statements
of income and members' capital for such Fiscal Year, audited by a
nationally-recognized, independent certified public accounting firm reasonably
satisfactory to Lender (Lender hereby confirming that the firm of
PriceWaterhouseCoopers is satisfactory to Lender ) whose opinion shall be to the
effect that such financial statements have been prepared in accordance with GAAP
applied on a consistent basis and shall not be qualified as to the scope of the
audit or as to the status of Borrower as a going concern. Together with
Borrower's annual financial statements, Borrower shall furnish to Lender, in
hard copy and, if available, electronic format:
(i) a statement of cash flows;
(ii) then current rent roll and occupancy reports;
(iii) an annual report for the most recently completed fiscal year,
describing Capital Expenditures (stated separately with respect to any
project costing in excess of $100,000), Tenant Improvements and Leasing
Commissions; and
(iv) such other information as Lender shall reasonably request.
5.13. QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in
any event within 45 days after the end of each Fiscal Quarter, Borrower shall
furnish to Lender, in hard copy and, if available, electronic format, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrower, including a balance sheet and operating statement as
of the end of such Fiscal Quarter, together with related statements of income,
members' capital and cash flows for such Fiscal Quarter and for the portion of
the Fiscal Year ending with such Fiscal Quarter, which statements shall be
accompanied by an Officer's Certificate certifying that the same are true and
correct and were prepared in accordance with GAAP applied on a consistent basis,
subject to changes resulting from audit and normal year-end audit adjustments.
Each such quarterly report shall be accompanied by the following, in hard copy
and, if available, electronic format:
(i) a statement in reasonable detail which calculates Net
Operating Income for the Test Period ending at the end of such Fiscal Quarter;
(ii) a summary of Leases signed during such quarter, which summary
shall include the Tenant's name, lease term, base rent, Tenant
Improvements, leasing commissions paid, free rent and other material tenant
concessions;
(iii) then current rent roll and occupancy reports;
(iv) notice of any change in Borrower's condition, financial or
otherwise, which is reasonably likely to have a Material Adverse Effect;
52
(v) evidence reasonably satisfactory to Lender that any
installments of insurance premiums payable during such Fiscal Quarter in
accordance with SECTION 5.15(c) have been paid; and
(vi) such other information as Lender shall reasonably request.
5.14. MONTHLY FINANCIAL STATEMENTS. Until the occurrence of the
Securitization, Borrower shall furnish within 45 days after the end of each
calendar month, in hard copy and, if available, electronic format, monthly and
year-to-date unaudited financial statements prepared for such month with respect
to Borrower, including a balance sheet and operating statement as of the end of
such month, together with related statements of income, members' capital and
cash flows for such month and for the portion of the Fiscal Year ending with
such month, which statements shall be accompanied by an Officer's Certificate
certifying that the same are true and correct and were prepared in accordance
with GAAP applied on a consistent basis, subject to changes resulting from audit
and normal year-end audit adjustments. Each such monthly report shall be
accompanied by the following:
(i) a summary of Leases signed during such month, which summary
shall include the Tenant's name, lease term, base rent, escalations, Tenant
Improvements, leasing commissions paid, free rent and other concessions;
(ii) then current rent roll and occupancy reports; and
(iii) such other information as Lender shall reasonably request.
5.15. INSURANCE.
(a) Borrower shall obtain and maintain with respect to the
Property, for the mutual benefit of Borrower and Lender at all times, the
following policies of insurance:
(i) insurance against loss or damage by standard perils then
included within the classification "All Risks Special Form Cause of Loss"
(including coverage for damage caused by windstorm and hail). Such
insurance shall (A) be in an aggregate amount equal to the full replacement
cost of the Property and fixtures (without deduction for physical
depreciation); (B) have deductibles acceptable to Lender (but in any event
not in excess of $250,000); (C) contain a "Replacement Cost Endorsement"
and an "Agreed Upon Amount Endorsement" with a waiver of depreciation; (D)
include an ordinance or law coverage endorsement containing Coverage A:
"Loss Due to Operation of Law" (with a minimum liability equal to
$10,000,000 for property damage and $10,000,000 for business loss),
Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverages; and (E) contain coverage for additions and
alterations;
(ii) flood insurance if any portion of the Property is located in
an area identified by the Federal Emergency Management Agency as a "100
year flood plain" or special hazard area (including Zones B, X, C and
Shaded X areas), (A) in an amount equal to the maximum limit of coverage
available under the National Flood Insurance
53
Program (or in a greater amount if required by the Lender), and (B) having
deductibles not in excess $25,000;
(iii) commercial general liability insurance, including broad form
coverage of property damage, blanket contractual liability and personal
injuries (including death resulting therefrom) and containing minimum
limits per occurrence of not less than $1,000,000 with not less than a
$2,000,000 general aggregate for any policy year. In addition, at least
$100,000,000 excess and/or umbrella liability insurance shall be obtained
and maintained for any and all claims, including all legal liability
imposed upon Borrower and all related court costs and attorneys' fees and
disbursements;
(iv) rental loss and/or business interruption insurance in an
amount equal to not less than 18 months of the estimated annual gross
revenues from the Property, such insurance to cover losses for a period not
less than 18 months after any Casualty. The amount of such insurance shall
be increased from time to time as and when the gross revenues from the
Property increase;
(v) insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning equipment,
high pressure piping, machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in any of the Improvements (without
exclusion for explosions) and insurance against loss of occupancy or use
arising from any breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by institutional lenders for
properties comparable to the Property;
(vi) worker's compensation insurance with respect to all employees
of Borrower as and to the extent required by any Governmental Authority or
Legal Requirement and employer's liability coverage of at least $1,000,000;
provided that Borrower may self-insure with respect to the foregoing so
long as (i) such self insurance is administered in accordance with the law
of the State of Nevada and (ii) such self-insurance shall provide for a
retention by Borrower of no greater than $250,000 per occurrence;
(vii) during any period of a Material Alteration, "All Risk"
insurance or "Course of Construction" insurance in non-reporting form, (A)
covering any improvements under construction, being renovated or otherwise
being altered, and (B) in an amount equal to not less than the full
insurable value of the Property against such risks (including fire and
extended coverage and collapse of the Improvements to agreed limits) as
Lender may request, in form and substance reasonably acceptable to Lender;
(viii) if required by Lender, earthquake coverage shall be included
in the Policy obtained in accordance with Section 5.15(a)(i), with a
deductible of not more than $500,000; and
(ix) such other insurance as may from time to time be reasonably
requested by Lender; PROVIDED that Borrower shall not be required to obtain
such insurance as is required by any of CLAUSES (i) through (viii) of this
SECTION 5.15(a) if such insurance is
54
both (a) not being required by prudent institutional lenders with respect
to retail properties similar to the Property located in or around the
region in which the Property is located and (b) not available at
commercially reasonable rates; PROVIDED FURTHER that the foregoing proviso
shall in no event apply to the insurance coverage required under SECTION
5.15(b)(xi) below.
(b) All policies of insurance (the "POLICIES") required pursuant
to this SECTION 5.15:
(i) shall be issued by one or more primary insurers having a
claims-paying ability of at least "AA-" or its equivalent by each of the
Rating Agencies, or by a syndicate of insurers through which at least 75%
of the coverage (if there are 4 or fewer members of the syndicate) or at
least 60% of the coverage (if there are 5 or more members of the syndicate)
is with carriers having such claims-paying ability ratings (provided that
all such carriers shall have claims-paying ability ratings of not less than
"A-" or the equivalent);
(ii) shall be maintained throughout the term of the Loan without
cost to Lender;
(iii) with respect to casualty policies, shall contain a standard
noncontributory mortgagee clause naming Lender and its successors and
assigns as additional insureds and, subject to the REA, first mortgagee and
loss payee;
(iv) with respect to liability policies, shall name Lender and its
successors and assigns as additional insureds;
(v) with respect to rental or business interruption insurance
policies, shall, name Lender and its successors and/or assigns as
additional insureds, and, subject to the REA, loss payee;
(vi) shall contain an endorsement providing that neither Borrower
nor Lender nor any other party shall be a co-insurer under said Policies
and that Lender shall receive at least 30 days' (10 days in the case of
non-payment of premiums) prior written notice of any modification,
reduction or cancellation thereof;
(vii) shall contain an endorsement providing that no act or
negligence of Borrower or of a Tenant or other occupant shall affect the
validity or enforceability of the insurance insofar as a mortgagee is
concerned;
(viii) shall contain a waiver of subrogation against Lender;
(ix) shall contain deductibles no larger than $250,000;
(x) may be in the form of a blanket policy (which blanket policy
may also cover, INTER ALIA, the Hotel/Casino and/or the SECC, except that
the separate terrorism policy delivered pursuant to CLAUSE (xi) below may
only cover the Property, the Hotel/Casino, SECC and/or the contemplated
"Phase II Resort" to be developed on the
55
real property described on EXHIBIT H-1 hereto), PROVIDED that Borrower
shall provide evidence satisfactory to Lender that overall insurance limits
will under no circumstance limit the amount that will be paid in respect of
the Property to less than the amounts required under SECTION 5.15(a), and
such blanket policy shall provide that, unless otherwise agreed to by
Lender, the limit of such policy shall be a "true blanket limit" and not
limited by a schedule of values for the properties covered thereby (unless
the scheduled value for the Property complies with SECTION 5.15(a)(i)
above); and
(xi) shall include coverage for terrorism (either as part of the
Policies required to be obtained pursuant SECTION 5.15(a) above or as a
separate Policy) in an amount no less than the Loan Amount, subject to a
deductible of no more than $2,000,000 (or with respect to business income
loss, either a 30-day waiting period or a 30-day deductible) or such higher
deductible satisfactory to Lender in its sole and absolute discretion, and
in form and substance reasonably satisfactory to Lender, which coverage
will be maintained for so long as such coverage (A) is being obtained by
prudent owners of real estate in the United States of a similar type and
quality and a similar location to the Property or (B) is otherwise
available for an annual premium that is less than or equal to $1,000,000
(the "PREMIUM THRESHOLD"); PROVIDED that if neither clause (A) nor clause
(B) of this SECTION 5.15(b)(xi) is satisfied, then Borrower shall obtain
terrorism coverage (at a cost not to exceed to Premium Threshold) from such
providers and with such coverage as shall be acceptable to Lender in its
reasonable discretion. Terrorism coverage obtained by Borrower pursuant to
this SECTION 5.15(b)(xi) may be in the form of a blanket policy covering
the Property, the Hotel/Casino and the Convention Center, provided that (w)
the loss payee for the Policy shall be either Lender or a trustee for the
benefit of Lender (and the owners of the Hotel/Casino and the Convention
Center and their respective mortgagees), (x) the trustee shall be a party
reasonably satisfactory to Lender and the Rating Agencies (PROVIDED that
The Bank of Nova Scotia, so long as it maintains the ratings in effect on
the date hereof, shall be deemed reasonably satisfactory to Lender and the
Rating Agencies), (y) the Policy shall contain, if available, a "priority
of payment" endorsement providing that any Loss Proceeds payable thereunder
will be applied first, in accordance with the
Loan Agreement (including
setting aside amounts to pay business interruption losses of Borrower up to
the policy limit prior to applying such Loss Proceeds to restoration of
either the Hotel/Casino and/or the Convention Center) and (z) the REA shall
be amended to provide that the trustee shall deposit any and all Loss
Proceeds received under such Policy into the Loss Proceeds Account for
application in accordance with this Agreement, except if and to the extent
such Loss Proceeds exceed the cost of restoration of the Property, as
reasonably determined by Lender.
Any policies of insurance maintained by Borrower but not required hereunder
shall comply with clauses (iii), (iv), (v), (vi) and (viii) above. Lender hereby
confirms that the Policies delivered to Lender on the Closing Date in accordance
with the requirements set forth in SECTION 5.15(b)(xi) satisfy such
requirements.
(c) Promptly after the Closing Date and promptly after the date of
renewal or replacement of any Policy (but, in each case, not more than 60 days
after such date), Borrower shall deliver to Lender copies, certified as true and
correct by Borrower, of the Policies required to be maintained pursuant to the
provisions of this Agreement. In addition, not later than 30 days
56
prior to the expiration date of any Policy, Borrower shall deliver to Lender
certificates of insurance (on ACCORD Form 27 where available) and binders
evidencing the renewal or replacement of such Policy. Borrower shall pay the
annual premiums for all Policies in full on or prior to the date of renewal or
issuance thereof; PROVIDED that, notwithstanding the foregoing, Borrower shall
be permitted to pay the annual premiums for the Policies in installments if (i)
Borrower shall deliver, or cause to be delivered, not less than 15 Business Days
prior to the expiration date of such Policies, evidence reasonably satisfactory
to Lender that all amounts necessary to pay such annual premiums, as determined
in accordance with the REA, have been deposited in the REA Insurance Escrow
Account by Borrower and the other parties to the REA required to make such
deposits in accordance with Section 1(d) of Article VI of the REA.
5.16. CASUALTY AND CONDEMNATION.
(a) Borrower shall give prompt notice to Lender of any Casualty or
Condemnation. Subject to applicable provisions of the REA, Lender may (x)
jointly with Borrower settle and adjust any claims, (y) during the continuance
of an Event of Default, settle and adjust any claims without the consent or
cooperation of Borrower, or (z) allow Borrower to settle and adjust any claims;
except that if no Event of Default has occurred and is continuing, Borrower may
settle and adjust claims aggregating (with respect to the portion thereof
attributable to the Property) not in excess of $1,500,000 if such settlement or
adjustment is carried out in a competent and timely manner, but subject to the
provisions of the REA, Lender shall be entitled to collect and receive any and
all Loss Proceeds. The reasonable expenses incurred by Lender in the adjustment
and collection of Loss Proceeds shall become part of the Indebtedness and shall
be reimbursed by Borrower to Lender upon demand therefor.
(b) Subject to the provisions of the REA, all Loss Proceeds from
any Casualty or Condemnation shall be immediately deposited into the Loss
Proceeds Account (monthly rental loss/business interruption proceeds to be
initially deposited into the Loss Proceeds Account and subsequently deposited
into the Cash Management Account in installments as and when the lost rental
income covered by such proceeds would have been payable). If either (x) any
Condemnation or Casualty occurs as to which, in the reasonable judgment of
Lender:
(i) in the case of a Casualty, the cost of restoration would not
exceed 30% of the Loan Amount and the Casualty does not render
untenantable, or result in the cancellation of Leases covering, more than
30% of the gross rentable area of the Property;
(ii) in the case of a Condemnation, the Condemnation does not
render untenantable, or result in the cancellation of Leases covering, more
than 15% of the gross rentable area of the Property;
(iii) restoration of the Property is reasonably expected to be
completed prior to the expiration of rental interruption insurance and at
least six months prior to the Maturity Date;
57
(iv) after such restoration, the fair market value of the Property
is reasonably expected to equal at least the fair market value of the
Property immediately prior to such Condemnation or Casualty (assuming the
affected portion of the Property is relet); and
(v) in the case of a Casualty related to a terrorist act affecting
the Property, the Hotel/Casino and/or the Convention Center, Lender
determines that such Casualty will not result in a Material Adverse Effect;
or (y) if restoration of the Property is required by the REA, or if Lender
otherwise elects to allow Borrower to restore the Property, then the Loss
Proceeds shall be held and disposed of pursuant to, and under the conditions set
forth in, Section 12 of Article X of the REA. To the extent not inconsistent
with Section 12 of Article X of the REA the following provisions (i.e., all of
the remaining provisions of this SECTION 5.15(b)) shall apply: the Loss Proceeds
after receipt thereof by Lender and reimbursement of any reasonable expenses
incurred by Lender in connection therewith shall be applied to the cost of
restoring, repairing, replacing or rebuilding the Property or part thereof
subject to the Casualty or Condemnation, in the manner set forth below (and
Borrower shall commence as promptly and diligently as practicable to prosecute
such restoring, repairing, replacing or rebuilding of the Property in a
workmanlike fashion and in accordance with applicable law to a status at least
equivalent to the quality and character of the Property immediately prior to the
Condemnation or Casualty to the extent practicable). Provided that no Event of
Default shall have occurred and be then continuing, Lender shall disburse Loss
Proceeds to Borrower upon Lender's being furnished with (i) evidence reasonably
satisfactory to it of the estimated cost of completion of the restoration, (ii)
funds, or assurances reasonably satisfactory to Lender that such funds are
available and sufficient in addition to any remaining Loss Proceeds, to complete
the proposed restoration, and (iii) such architect's certificates, waivers of
lien, contractor's sworn statements, title insurance endorsements, bonds, plats
of survey and such other evidences of cost, payment and performance as Lender
may reasonably request; and Lender may, in any event, require that all plans and
specifications for restoration reasonably estimated by Lender to exceed
$1,500,000 be submitted to and approved by Lender prior to commencement of work
(which approval shall not be unreasonably withheld). If Lender reasonably
estimates that the cost to restore will exceed $1,500,000, Lender may retain a
local construction consultant to inspect such work and review Borrower's request
for payments and Borrower shall, on demand by Lender, reimburse Lender for the
reasonable fees and disbursements of such consultant (which fees and expenses
shall constitute Indebtedness). No payment shall exceed 90% of the value of the
work performed from time to time until such time as 50% of the restoration
(calculated based on the anticipated aggregate cost of the work) has been
completed, and amounts retained prior to completion of 50% of the restoration
shall not be paid prior to the final completion of the restoration. Funds other
than Loss Proceeds shall be disbursed prior to disbursement of such Loss
Proceeds, and at all times the undisbursed balance of such proceeds remaining in
the Loss Proceeds Account, together with any additional funds irrevocably and
unconditionally deposited therein or irrevocably and unconditionally committed
for that purpose, shall be at least sufficient in the reasonable judgment of
Lender to pay for the cost of completion of the restoration free and clear of
all Liens or claims for Lien.
(c) Borrower shall cooperate with Lender in obtaining for Lender
the benefits of any Loss Proceeds lawfully or equitably payable to Lender in
connection with the Property. Lender shall be reimbursed for any expenses
reasonably incurred in connection therewith
58
(including reasonable attorneys' fees and disbursements, and, if reasonably
necessary to collect such proceeds, the expense of an Appraisal on behalf of
Lender) out of such Loss Proceeds or, if insufficient for such purpose, by
Borrower.
(d) If Borrower is not entitled to apply Loss Proceeds toward the
restoration of the Property pursuant to SECTION 5.16(b) and Lender elects not to
permit such Loss Proceeds to be so applied, such Loss Proceeds shall be applied
on the first Payment Date following such election to the prepayment of the Loan
and shall be accompanied by (i) interest through the end of the applicable
Interest Accrual Period (calculated as if the amount prepaid were outstanding
for the entire Interest Accrual Period) and (ii) the applicable Make-Whole
Payment, if any.
5.17. ANNUAL BUDGET. Borrower has previously delivered to Lender the
Annual Budget for the Property for the 2002 Fiscal Year. At least 45 days prior
to the commencement of each subsequent Fiscal Year during the term of the Loan,
Borrower shall deliver to Lender for informational purposes only an Annual
Budget for the Property for the ensuing Fiscal Year and, promptly after
preparation thereof, any subsequent revisions to the Annual Budget. During the
continuance of any Cash Trap Period or Event of Default, such Annual Budget and
any such revisions shall be subject to Lender's approval, except with respect to
Non-Discretionary Items (the Annual Budget, as so approved, the "APPROVED ANNUAL
BUDGET"); PROVIDED, HOWEVER, that (1) Borrower shall not amend any Annual Budget
more than once in any 60-day period, and (2) so long as no Event of Default is
continuing, the consent of Lender to any such Annual Budget and any such
revisions shall not be unreasonably withheld or delayed.
5.18. GENERAL INDEMNITY. Borrower shall indemnify, reimburse, defend
and hold harmless Lender and its officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") for, from and against any and all
Damages of any kind or nature whatsoever which may be imposed on, incurred by,
or asserted against the Indemnified Parties, in any way relating to or arising
out of the making or holding or enforcement of the Loan by Lender or the
administration of the Transaction to the extent resulting, directly or
indirectly, from any claim (including any Environmental Claim) made (whether or
not in connection with any legal action, suit, or proceeding) by or on behalf of
any Person; PROVIDED, HOWEVER, that no Indemnified Party shall have the right to
be indemnified hereunder for its own (or any other Indemnified Party's) fraud,
bad faith, gross negligence or willful misconduct. The provisions of and
undertakings and indemnification set forth in this SECTION 5.18 shall survive
the satisfaction and payment in full of the Indebtedness and termination of this
Agreement.
5.19. COVENANTS WITH RESPECT TO REA AND ESA.
(a) Borrower covenants and agrees to:
(i) comply with all material terms, conditions and covenants of
the REA and the ESA;
(ii) promptly deliver to Lender a true and complete copy of each
and every notice of default received by such Borrower with respect to any
obligation of Borrower under the provisions of the REA or the ESA;
59
(iv) deliver to Lender copies of any written notices of default or
event of default relating to the REA or the ESA served by Borrower;
(v) in addition to any rights granted Lender under the REA and/or
the ESA, after the occurrence of an Event of Default, so long as the Loan
is outstanding, the Borrower shall not grant or withhold any consent,
approval or waiver under the REA or the ESA without the prior written
consent of Lender (which consent shall not be unreasonably withheld or
delayed).
(b) Borrower shall pay all fees, assessments, charges or other
amounts assessed pursuant to the REA and the ESA when the same become due and
payable. Upon request of Lender, Borrower shall deliver to Lender evidence
reasonably satisfactory to Lender that such fees, assessments, charges and other
amounts which are then due and payable, have been paid by Borrower, which
evidence shall include, without limitation, a true and correct photocopy of
Borrower's cancelled check(s) evidencing such payment(s).
(c) In the event Loss Proceeds are required to be deposited into
an account maintained by the trustee under the REA pursuant to Article X of the
REA, Borrower shall cause such trustee to select an Eligible Account to serve
such purpose.
ARTICLE VI
NEGATIVE COVENANTS
6.1. LIENS ON THE PROPERTY. Borrower shall not permit or suffer the
existence of any Lien on any of its assets, other than Permitted Encumbrances.
6.2. OWNERSHIP. Borrower shall not own any assets other than the
Property and related personal property and fixtures located therein or used in
connection therewith.
6.3. TRANSFER. Borrower shall not Transfer any Collateral other
than the replacement or other disposition of obsolete or non-useful personal
property and fixtures in the ordinary course of business, and Borrower shall not
hereafter file a declaration of condominium with respect to the Property.
6.4. DEBT. Borrower shall not have any Debt, other than Permitted
Debt.
6.5. DISSOLUTION; MERGER OR CONSOLIDATION. Borrower shall not
dissolve, terminate, liquidate, merge with or consolidate into another Person.
6.6. CHANGE IN BUSINESS. Borrower shall not 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.
6.7. DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any material claim or Debt owed to it by any Person, except
for adequate consideration or in the ordinary course of its business.
60
6.8. AFFILIATE TRANSACTIONS. Other than the REA (and the
transactions and arrangements required thereunder) or the Master Leases,
Borrower shall not enter into, or be a party to, any transaction with any
Affiliate of Borrower, except on terms which are no less favorable to Borrower
than would be obtained in a comparable arm's length transaction with an
unrelated third party.
6.9. MISAPPLICATION OF FUNDS. Borrower shall not distribute any
Revenue or Loss Proceeds in violation of the provisions of this Agreement, fail
to remit amounts to the Cash Management Account as required by SECTION 3.1(b),
or misappropriate any security deposit or portion thereof.
6.10. PLACE OF BUSINESS. Borrower shall not change its chief
executive office or its principal place of business without giving Lender at
least 30 days' prior written notice thereof and promptly providing Lender such
information and replacement Uniform Commercial Code financing statements as
Lender may reasonably request in connection therewith.
6.11. MODIFICATIONS AND WAIVERS. Unless otherwise consented to in
writing by Lender:
(i) Borrower shall not amend, modify, terminate, renew, or
surrender any rights or remedies under any Lease, or enter into any Lease,
except in compliance with SECTION 5.8;
(ii) Borrower shall not terminate, amend or modify (a) the
operating agreement or certificate of formation of Borrower or the
certificate of incorporation or by-laws of Borrower Managing Member
(provided that Lender's consent to any amendment or modification of the
foregoing which does not affect the status of Borrower or Borrower Managing
Member as a Single-Purpose Entity shall not be unreasonably withheld), or
(b) the Approved Management Agreement, the REA, the ESA or any Master Lease
(provided that (1) so long as no Event of Default is then continuing,
Lender's consent shall not be unreasonably withheld, and (2) de minimis
amendments or modifications that do not adversely affect the Lender shall
be permitted without Lender's consent); and
(iii) Borrower shall not amend, modify, surrender or waive any
material rights or remedies under, or enter into or terminate, any Material
Agreement (other than the Material Agreements covered under CLAUSE (ii)
above) unless such action is performed in the ordinary course of business
and is commercially reasonable.
6.12. ERISA.
(a) Borrower shall not maintain or contribute to, or agree to
maintain or contribute to, or permit any ERISA Affiliate of Borrower to maintain
or contribute to or agree to maintain or contribute to, any employee benefit
plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of
ERISA or Section 412 of the Code.
(b) Borrower shall not engage in a non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975 of the Code, or
substantially similar provisions under
61
federal, state or local laws, rules or regulations or in any transaction that
would cause any obligation or action taken or to be taken hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement, the Deed
of Trust or any other Loan Document) to be a nonexempt prohibited transaction
under such provisions.
6.13. ALTERATIONS AND EXPANSIONS. During the continuance of a Cash
Trap Period or Event of Default, Borrower shall not perform or contract to
perform any Capital Expenditures that are not consistent with the Approved
Capital Budget (as the same may be amended in accordance with the provisions
hereof). Borrower shall not perform or contract to perform any Material
Alteration without the prior written consent of Lender, which consent (in the
absence of an Event of Default) shall not be unreasonably withheld, and which
consent shall be deemed given by Lender if (A) Lender shall not have notified
the Borrower in writing of its refusal to grant such consent within the Material
Alteration Approval Period (as hereinafter defined) after its receipt of a
written request for such consent from Borrower and (B) the written request
described in clause (A) shall prominently include a statement in capital letters
"URGENT - LENDER'S ATTENTION REQUIRED WITHIN 10 BUSINESS DAYS". If Lender's
consent is requested hereunder with respect to a Material Alteration, Lender may
retain a construction consultant to review such request and, if such request is
granted, Lender may retain a construction consultant to inspect the work from
time to time. Borrower shall, on demand by Lender, reimburse Lender for the
reasonable fees and disbursements of such consultant. As used herein, "MATERIAL
ALTERATION APPROVAL PERIODS" shall mean the 10 Business Day period following the
Lender's receipt of Borrower's written request; PROVIDED, HOWEVER, that Lender
may by written notice given to the Borrower within the initial 10 Business Day
period extend the initial Material Alteration Approval Period for a reasonable
time (not to exceed 30 days, subject to reasonable extension by Lender if Lender
is diligently pursuing its evaluation of the proposed Material Alteration).
6.14. ADVANCES AND INVESTMENTS. Borrower shall not lend money or
make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except for Permitted Investments.
6.15. SINGLE-PURPOSE ENTITY. Neither Borrower nor Borrower Managing
Member shall cease to be a Single-Purpose Entity.
6.16. ZONING AND USES. Borrower shall not do any of the following:
(i) initiate or support any limiting change in the permitted uses
of the Property (or to the extent applicable, zoning reclassification of the
Property) or any portion thereof, seek any variance under existing land use
restrictions, laws, rules or regulations (or, to the extent applicable, zoning
ordinances) applicable to the Property, or use or permit the use of the Property
in a manner that would result in the use of the Property becoming a
nonconforming use under applicable land-use restrictions or zoning ordinances or
that would violate the terms of any Major Lease, Material Agreement, Legal
Requirement or Permitted Encumbrance;
(ii) consent to any modification, amendment or supplement to any of
the terms of any Permitted Encumbrance in a manner adverse to the interests of
Lender;
62
(iii) impose or consent to the imposition of any restrictive
covenants, easements or encumbrances upon the Property in any manner that
adversely affects in any material respect its value, utility or transferability,
except in connection with an amendment of the REA otherwise permitted hereunder;
(iv) execute or file any subdivision plat affecting the Property,
or institute, or permit the institution of, proceedings to alter any tax lot
comprising the Property; or
(v) permit or consent to any Property being used by the public or
any Person in such manner as might make possible a claim of adverse usage or
possession or of any implied dedication or easement.
6.17. WASTE. Borrower shall not commit or permit any Waste on the
Property, nor take any actions that might invalidate any insurance required to
be carried on the Property under this Agreement.
ARTICLE VII
DEFAULTS
7.1. EVENT OF DEFAULT. The occurrence of any one or more of the
following events shall be, and shall constitute the commencement of, an "EVENT
OF DEFAULT" hereunder (any Event of Default which has occurred shall continue
unless and until waived by Lender in its sole discretion):
(a) PAYMENT.
(i) Borrower shall default in the payment when due of any
principal or interest owing hereunder or under the Note (including any
mandatory prepayment required hereunder); or
(ii) Borrower shall default, and such default shall continue for at
least five Business Days after notice to Borrower that such amounts are
owing, in the payment when due of fees, expenses or other amounts owing
hereunder, under the Note or under any of the other Loan Documents (other
than principal and interest owing hereunder or under the Note).
(b) REPRESENTATIONS. Any representation made by Borrower in any of
the Loan Documents, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender hereunder or under any
other Loan Documents that was required to be furnished shall have been false or
misleading in any material respect as of the date such representation was made
and such default is not cured within 30 days after written notice from Lender.
(c) OTHER LOAN DOCUMENTS. Any Loan Document shall fail to be in
full force and effect or to convey the material Liens, rights, powers and
privileges purported to be created thereby; or a default shall occur under any
of the other Loan Documents beyond the expiration of
63
any applicable cure period (and if no cure period is specified in such Loan
Document, the analogous cure period specified in Section 7.1(a), (b) or (i), as
applicable, shall apply).
(d) BANKRUPTCY, ETC.
(i) Borrower or Borrower Managing Member shall commence a
voluntary case concerning itself under Title 11 of the United States Code
(as amended, modified, succeeded or replaced, from time to time, the
"BANKRUPTCY CODE");
(ii) Borrower or Borrower Managing Member shall commence any other
proceeding under any reorganization, arrangement, adjustment of debt,
relief of creditors, dissolution, insolvency or similar law of any
jurisdiction whether now or hereafter in effect relating to Borrower or
Borrower Managing Member;
(iii) there is commenced against Borrower or Borrower Managing
Member an involuntary case under the Bankruptcy Code, or any such other
proceeding, which remains undismissed for a period of 90 days after
commencement;
(iv) Borrower or Borrower Managing Member is adjudicated insolvent
or bankrupt;
(v) Borrower or Borrower Managing Member suffers appointment of
any custodian or the like for it or for any substantial portion of its
property and such appointment continues unchanged or unstayed for a period
of 90 days after commencement of such appointment;
(vi) Borrower or Borrower Managing Member makes a general
assignment for the benefit of creditors; or
(vii) any action is taken by Borrower or Borrower Managing Member
for the purpose of effecting any of the foregoing.
(e) CHANGE OF CONTROL.
(i) A Change of Control shall occur; or
(ii) any party other than Borrower's current direct majority
equityholder shall obtain 49% or more of the direct equity interests in
Borrower (even if not constituting a Change of Control) and Borrower shall
fail to deliver to Lender with respect to such new equityholder a new
non-consolidation opinion satisfactory to (A) prior to any Securitization,
Lender (Lender's approval of any such non-consolidation opinion which is in
substantially the form of the Nonconsolidation Opinion shall not be
unreasonably withheld) or (B) after any Securitization, each of the Rating
Agencies.
(f) EQUITY PLEDGE; PREFERRED EQUITY. Any direct or indirect equity
interest in or right to distributions from Borrower shall be subject to a Lien
in favor of any Person, or Borrower or any holder of a direct or indirect
interest in Borrower shall issue preferred equity (or debt granting the holder
thereof rights substantially similar to those generally associated with
64
preferred equity), in each case unless Rating Confirmation is received with
respect thereto, except that pledges of direct and indirect equity interests in
and rights to distributions from a Qualified Equityholder (including Sponsor),
and the issuance of preferred equity interests (or debt granting the holder
thereof rights substantially similar to those generally associated with
preferred equity) in a Qualified Equityholder (including Sponsor), shall be
permitted.
(g) INSURANCE. Borrower shall fail to maintain in full force and
effect all Policies required hereunder.
(h) ERISA; NEGATIVE COVENANTS. A default shall occur in the due
performance or observance by Borrower of any term, covenant or agreement
contained in SECTION 5.9 or in ARTICLE VI.
(i) OTHER COVENANTS. A default shall occur in the due performance
or observance by Borrower of any term, covenant or agreement (other than those
referred to in SUBSECTIONS (a) through (h) and (j) through (k), inclusive, of
this SECTION 7.1) contained in this Agreement or in any of the other Loan
Documents, except that if such default referred to in this SUBSECTION (i) is
susceptible of being cured, such default shall not constitute an Event of
Default unless and until it shall remain uncured for 10 days after Borrower
receives written notice thereof, for a default which can be cured by the payment
of money, or for 30 days after Borrower receives written notice thereof, for a
default which cannot be cured by the payment of money; and if a default cannot
be cured by the payment of money but is susceptible of being cured and cannot
reasonably be cured within such 30-day period, and Borrower commences to cure
such default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, Borrower shall have such additional
time as is reasonably necessary to effect such cure, but in no event in excess
of 120 days from the original notice.
(j) MASTER LEASES. Any of the Master Leases shall terminate, or be
terminated prior to its stated expiration date (unless the underlying Tenant
Lease has been or is simultaneously being terminated in accordance with the
terms of this Agreement), or be surrendered by Borrower without the prior
written consent of Lender, or if the Borrower or the lessor under any Master
Lease shall be in default thereof, beyond any applicable cure period.
(k) REA; ESA. The REA or the ESA shall terminate or be terminated
or cancelled, prior to its stated expiration date, or if Borrower shall be in
default of the REA or the ESA beyond any applicable cure period; PROVIDED that
with respect to a termination or cancellation of the ESA, such termination or
cancellation shall have been reasonably determined by Lender to be reasonably
likely to result in a Material Adverse Effect.
7.2. REMEDIES.
(a) During the continuance of an Event of Default, Lender may, by
written notice to Borrower, in addition to any other rights or remedies
available pursuant to this Agreement, the Note, the Deed of Trust and the other
Loan Documents, at law or in equity, declare by written notice to Borrower all
or any portion of the Indebtedness to be immediately due and payable, whereupon
all or such portion of the Indebtedness shall so become due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the
65
Loan Documents against Borrower and the Property (including all rights or
remedies available at law or in equity); PROVIDED, HOWEVER, that,
notwithstanding the foregoing, if an Event of Default specified in paragraph
7.1(d) shall occur, then the Indebtedness shall immediately become due and
payable without the giving of any notice or other action by Lender. Any 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 in this
Agreement or in the other Loan Documents.
(b) If Lender forecloses on the Property, Lender shall apply all
net proceeds of such foreclosure to repay the Indebtedness, the Indebtedness
shall be reduced to the extent of such net proceeds and the remaining portion of
the Indebtedness shall remain outstanding and secured by the Property and the
other Loan Documents, it being understood and agreed by Borrower that Borrower
is liable for the repayment of all the Indebtedness; PROVIDED, HOWEVER, that at
the election of Lender, the Note shall be deemed to have been accelerated only
to the extent of the net proceeds actually received by Lender with respect to
the Property and applied in reduction of the Indebtedness.
(c) During the continuance of any Event of Default, Lender may,
but without any obligation to do so and without notice to or demand on Borrower
and without releasing Borrower from any obligation hereunder, take any action to
cure such Event of Default. Lender may enter upon any or all of the Property
upon reasonable notice to Borrower for such purposes or appear in, defend, or
bring any action or proceeding to protect its interest in the Property or to
foreclose the Deed of Trust or collect the Indebtedness. The reasonable costs
and expenses incurred by Lender in exercising rights under this paragraph
(including reasonable attorneys' fees), with interest at the Default Rate for
the period after notice from Lender that such costs or expenses were incurred to
the date of payment to Lender, shall constitute a portion of the Indebtedness,
shall be secured by the Deed of Trust and other Loan Documents and shall be due
and payable to Lender upon demand therefor.
(d) Interest shall accrue on any judgment obtained by Lender in
connection with its enforcement of the Loan at a rate of interest equal to the
Default Rate.
7.3. NO WAIVER. No delay or omission to exercise any remedy, right
or power accruing during 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 by
Lender to be expedient. A waiver of any Default or Event of Default shall not be
construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon.
7.4. APPLICATION OF PAYMENTS DURING CONTINUANCE OF AN EVENT OF
DEFAULT. Notwithstanding anything to the contrary contained herein, during the
continuance of an Event of Default, all amounts received by Lender in respect of
the Loan shall be applied toward the components of the Indebtedness (E.G.,
Lender's expenses in enforcing the Loan, interest, principal and other amounts
payable hereunder), the Loan and the Note Components in such sequence as Lender
shall elect in its sole discretion.
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ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS PRECEDENT TO CLOSING. This Agreement shall become
effective on the date that all of the following conditions shall have been
satisfied (or waived in accordance with SECTION 9.3):
(a) LOAN DOCUMENTS. Lender shall have received a duly executed
copy of each Loan Document. Each Loan Document which is to be recorded in the
public records shall be in form suitable for recording.
(b) ORIGINATION FEE. Borrower shall have paid to Lender the
origination fee (or provided for the direct payment thereof from the proceeds of
the Loan) set forth in the term sheet dated May 10, 2002 between Borrower and
GSMC.
(c) COLLATERAL ACCOUNTS. Each of the Collateral Accounts shall
have been established with the Cash Management Bank and funded to the extent
required under ARTICLE III.
(d) OPINIONS OF COUNSEL. Lender shall have received (i) a
New York
legal opinion in substantially the form of EXHIBIT C-1 or otherwise satisfactory
to Lender, (ii) a legal opinion with respect to the laws of the state in which
the Property is located, in substantially the form of EXHIBIT C-2 or otherwise
satisfactory to Lender, and (iii) a bankruptcy nonconsolidation opinion in
substantially the form of EXHIBIT C-3 or otherwise satisfactory to Lender with
respect to each Person owning at least a 49% direct equity interest in Borrower
and any affiliated property manager.
(e) ORGANIZATIONAL DOCUMENTS. Lender shall have received all
documents reasonably requested by Lender relating to the existence of Borrower
and Borrower Managing Member, the validity of the Loan Documents and other
matters relating thereto, in form and substance satisfactory to Lender,
including, but not limited to:
(i) AUTHORIZING RESOLUTIONS. A certified copy of the resolutions
of its board of directors of Borrower Managing Member approving and
adopting the Loan Documents to be executed by Borrower and authorizing the
execution and delivery thereof.
(ii) ORGANIZATIONAL DOCUMENTS. Certified copies of the certificate
of formation and the operating agreement of Borrower and the certificate of
incorporation and by-laws of Borrower Managing Member, in each case
together with all amendments thereto.
(iii) CERTIFICATES OF GOOD STANDING OR EXISTENCE. Certificates of
good standing or existence for Borrower and Borrower Managing Member issued
as of a recent date by its state of organization and by the state in which
the Property is located.
(f) LEASE; MATERIAL AGREEMENTS. Lender shall have received true
and complete copies of all Leases and all Material Agreements.
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(g) LIEN SEARCH REPORTS. Lender shall have received satisfactory
reports of Uniform Commercial Code, tax lien and judgment searches conducted by
a search firm acceptable to Lender with respect to the Property and Borrower,
such searches to be conducted in such locations as Lender shall have requested.
(h) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing on the Closing Date.
(i) NO INJUNCTION. No Legal Requirement shall exist, and no
litigation shall be pending or threatened, which in the good faith judgment of
Lender would enjoin, prohibit or restrain, or impose or result in the imposition
of any material adverse condition upon, the making or repayment of the Loan or
the consummation of the Transaction.
(j) REPRESENTATIONS. The representations in this Agreement and in
the other Loan Documents shall be true and correct in all respects on and as of
the Closing Date with the same effect as if made on such date.
(k) ESTOPPEL LETTERS. Lender shall have received (i) estoppel
letters in form and substance satisfactory to Lender from Tenants occupying not
less than 85% of the aggregate occupied rentable square feet in the Property,
which estoppel letters shall include estoppel letters from the Tenants under
each Major Lease; (ii) estoppel letters in form and substance satisfactory to
Lender from each of the parties (other than Borrower) to the REA, the ESA and
the Master Leases.
(l) NO MATERIAL ADVERSE EFFECT. No event or series of events shall
have occurred which Lender reasonably -believes has had or is reasonably likely
to have a Material Adverse Effect.
(m) TRANSACTION COSTS. Borrower shall have paid all Transaction
Costs (or provided for the direct payment of such Transaction Costs by Lender
from the proceeds of the Loan).
(k) INSURANCE. Lender shall have received certificates of
insurance (on ACCORD Form 27 where available) and binders, demonstrating
insurance coverage in respect of the Property of types, in amounts, with
insurers and otherwise in compliance with the terms, provisions and conditions
set forth in this Agreement. Such certificates shall indicate that Lender is
named as additional insured on each liability Policy, and that each casualty
Policy and rental interruption Policy contains a loss payee endorsement in favor
of Lender.
(l) TITLE. Lender shall have received a marked, signed commitment
to issue, or a pro-forma version of, a Qualified Title Insurance Policy in
respect of the Property, listing only such exceptions as are reasonably
satisfactory to Lender.
(m) ZONING. Lender shall have received evidence reasonably
satisfactory to Lender that the Property is in compliance with all applicable
zoning requirements (including a zoning report, a zoning endorsement if
obtainable and a letter from the applicable municipality if obtainable).
68
(n) PERMITS; CERTIFICATE OF OCCUPANCY. Lender shall have received
a copy of all Permits necessary for the use and operation of the Property and
the certificate(s) of occupancy, if required, for the Property, all of which
shall be in form and substance reasonably satisfactory to Lender.
(o) ENGINEERING REPORT. Lender shall have received a current
Engineering Report with respect to the Property, which report shall be in form
and substance reasonably satisfactory to Lender.
(p) ENVIRONMENTAL REPORT. Lender shall have received an
Environmental Report (not more than six months old) with respect to the Property
which discloses no material environmental contingencies with respect to the
Property.
(q) QUALIFIED SURVEY. Lender shall have received a Qualified
Survey with respect to the Property in form and substance reasonably
satisfactory to Lender.
(r) APPRAISAL. Lender shall have obtained an Appraisal of the
Property satisfactory to Lender.
(s) CONSENTS, LICENSES, APPROVALS, ETC. Lender shall have received
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by Borrower, and the validity and
enforceability, of the Loan Documents, and such consents, licenses and approvals
shall be in full force and effect.
(t) FINANCIAL INFORMATION. Lender shall have received (i) audited
financial statements for the Sponsor and audited operating statements for the
Property, in each case for the prior three years, certified by a
nationally-recognized, independent certified public accounting firm satisfactory
to Lender, (ii) current results from operations certified by the Chief Financial
Officer of the Sponsor, and (iii) such other financial information as Lender
shall reasonably request, which information shall be in form and substance
satisfactory to Lender.
(u) ANNUAL BUDGET. Lender shall have received the 2002 Annual
Budget with respect to the Property.
(v) ADDITIONAL MATTERS. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender. All corporate and other proceedings,
all other documents (including all documents referred to in this Agreement and
not appearing as exhibits to this Agreement) and all legal matters in connection
with the Loan shall be reasonably satisfactory in form and substance to Lender.
ARTICLE IX
MISCELLANEOUS
9.1. SUCCESSORS. Except as otherwise provided in this Agreement,
whenever in this Agreement any of the parties to this Agreement is referred to,
such reference shall be deemed to include the successors and permitted assigns
of such party. All covenants, promises
69
and agreements in this Agreement contained, by or on behalf of Borrower, shall
inure to the benefit of Lender and its successors and assigns.
9.2. GOVERNING LAW.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER OR THE
SPONSOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION, PERFECTION OR
ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY LOAN
DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK) MAY BE INSTITUTED
IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. BORROWER AND THE SPONSOR
HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUCH SUIT, ACTION OR PROCEEDING.
9.3. MODIFICATION, WAIVER IN WRITING. Neither this Agreement nor
any other Loan Document may be amended, changed, waived, discharged or
terminated, nor shall any consent or approval of Lender be granted hereunder,
unless such amendment, change, waiver, discharge, termination, consent or
approval is in writing signed by Lender.
9.4. NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing by expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of delivery or attempted delivery, addressed
as follows (or at such other address and person as shall be designated from time
to time by any party to this Agreement, as the case may be, in a written notice
to the other parties to this Agreement in the manner provided for in this
Section). A notice shall be deemed to have been given when delivered or upon
refusal to accept delivery.
If to Lender:
Archon Financial, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with copies to:
70
▇▇▇▇▇▇▇ Sachs Mortgage Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
and
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
If to Borrower:
Grand Canal Shops II, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to Sponsor:
Las Vegas Sands, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
9.5. TRIAL BY JURY. BORROWER AND THE SPONSOR, TO THE FULLEST EXTENT
THAT THEY MAY LAWFULLY DO SO, HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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
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AND VOLUNTARILY BY BORROWER AND THE SPONSOR AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER
AND THE SPONSOR.
9.6. HEADINGS. The Article and Section headings in this Agreement
are included in this Agreement for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
9.7. ASSIGNMENT AND PARTICIPATION.
(a) Borrower may not sell, assign or transfer any interest in the
Loan Documents or any portion thereof (including Borrower's rights, title,
interests, remedies, powers and duties hereunder and thereunder).
(b) Subject to the provisions of this Section 9.7, Lender and each
assignee of all or a portion of the Loan shall have the right from time to time
in its discretion to sell one or more of the Notes or any interest therein (an
"ASSIGNMENT ") and/or sell a participation interest in one or more of the Notes
(a "PARTICIPATION"). Borrower agrees reasonably to cooperate with Lender, at
Lender's request and expense (except to the extent set forth to the contrary in
the Cooperation Agreement), in order to effectuate any such Assignment or
Participation. In the case of an Assignment, (i) each assignee shall have, to
the extent of such Assignment, the rights, benefits and obligations of the
assigning Lender as a "Lender" hereunder and under the other Loan Documents,
(ii) the assigning Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to an Assignment, relinquish its
rights and be released from its obligations under this Agreement and (iii) one
Lender shall serve as agent for all Lenders and shall be the sole Lender to whom
notices, requests and other communications shall be addressed and the sole party
authorized to grant or withhold consents hereunder on behalf of the Lenders
(subject, in each case, to appointment of a Servicer, pursuant to SECTION 9.22,
to receive such notices, requests and other communications and/or to grant or
withhold consents, as the case may be) and to be the sole Lender to designate
the account to which payments shall be made by Borrower to the Lenders
hereunder. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company shall maintain, or cause to be
maintained, as agent for Borrower, a register at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ or such other address as it shall notify Borrower in writing, on which it
shall enter the name or names of the registered owner or owners from time to
time of the Notes. Borrower agrees that upon effectiveness of any Assignment of
any Note in part, Borrower will promptly provide to the assignor and the
assignee separate promissory notes in the amount of their respective interests
(but, if applicable, with a notation thereon that it is given in substitution
for and replacement of an original Note or any replacement thereof), and
otherwise in the form of such Note, upon return of the Note then being replaced.
Each potential assignee and potential participant (until it becomes clear that
such potential assignee or potential participant is not to become an actual
assignee or participant), and each actual assignee and participant, and each
Rating Agency or potential investor in connection with a Securitization, shall
be entitled to receive all information received by Lender under this Agreement.
After the effectiveness of any Assignment, the party conveying the Assignment
shall provide notice to
72
Borrower and each Lender of the identity and address of the assignee.
Notwithstanding anything in this Agreement to the contrary, after an Assignment,
the assigning Lender (in addition to the assignee) shall continue to have the
benefits of any indemnifications contained in this Agreement which such
assigning Lender had prior to such assignment with respect to matters occurring
prior to the date of such assignment.
(c) If, pursuant to this SECTION 9.7, any interest in this
Agreement or any Note is transferred to any transferee that is not a U.S.
Person, the transferor Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to furnish to the transferor Lender and
Borrower two original copies of either Form W-8BEN or Form W-8ECI or any other
form in order to establish an exemption from, or reduction in the rate of, U.S.
withholding tax on all interest payments hereunder, and (ii) to agree (for the
benefit of Lender and Borrower) to provide the transferor Lender a new Form
W-8BEN or Form W-8ECI or any forms reasonably requested in order to establish an
exemption from, or reduction in the rate of, U.S. withholding tax upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption. If any such transferee is not a "bank" or other
Person described in Section 881(c)(3) of the Code and cannot deliver either
Internal Revenue Service Form W8-ECI or Form W-8BEN pursuant to clause (i)
above, the transferor Lender shall cause each such transferee, concurrently with
the effectiveness of such transfer, to deliver a Certificate of Non-Bank Status,
together with two original copies of Internal Review Service Form W8 (or any
successor form), all properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required under the
Code to establish that such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payment to such Lender of
interest payable under any of the Loan Documents.
(d) Unless an Event of Default shall have occurred and be
continuing, neither Lender nor any assignee of all or a portion of the Loan
shall consummate an Assignment or Participation to a Prohibited Transferee;
PROVIDED that Lender and each such assignee shall be entitled to rely, at
Lender's or such assignee's sole election, on a written statement from the
proposed assignee or participant that it is not a Prohibited Transferee (without
making any further inquiry or investigation) and neither Lender nor any such
assignee shall be liable to Borrower or to any other Person if Lender or such
assignee shall consummate an Assignment or Participation with a Person that
shall in fact be a Prohibited Transferee notwithstanding the fact such Person
delivered such a written statement. The foregoing provisions shall not apply to
an Assignment or Participation of the Loan in connection with a Securitization
or to the marketing and sale of the related securities.
9.8. 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.
73
9.9. PREFERENCES. Lender shall have no obligation to marshal any
assets in favor of Borrower or any other party or against or in payment of any
or all of the obligations of Borrower pursuant to this Agreement, the Note or
any other Loan Document. 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 and under the Loan Documents. To the
extent Borrower makes a payment or payments to Lender, which payment or proceeds
or any portion 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 portion 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.
9.10. REMEDIES OF BORROWER. If a claim is made that Lender or its
agents have unreasonably delayed acting or acted unreasonably in any case where
by law or under this Agreement, the Note, the Deed of Trust or the other Loan
Documents, any of such Persons has an obligation to act promptly or reasonably,
Borrower agrees that no such Person shall be liable for any monetary damages,
and Borrower's sole remedy shall be limited to commencing an action seeking
specific performance, injunctive relief and/or declaratory judgment, except in
any instance in which it has been finally determined that Lender's action, delay
or inaction has constituted willful misconduct or an illegal act.
9.11. OFFSETS, COUNTERCLAIMS AND DEFENSES. All payments made by
Borrower hereunder or under the other Loan Documents shall be made irrespective
of, and without any deduction for, any setoffs or counterclaims. Borrower waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with the Note, this Agreement, the other Loan
Documents or the Indebtedness. Any assignee of Lender's interest in the Loan
shall take the same free and clear of all offsets, counterclaims or defenses
which are unrelated to the Loan.
9.12. NO JOINT VENTURE. Nothing in this Agreement is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender, nor to grant Lender any interest in
the Property other than that of mortgagee or lender.
9.13. CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Note, the Deed of Trust or any of the other Loan Documents, the provisions of
this Agreement shall prevail.
9.14. BROKERS AND FINANCIAL ADVISORS. Borrower and Sponsor each
represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower and Sponsor each agree,
jointly and severally, to indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person that such Person acted on
behalf of Borrower in connection with the transactions contemplated in this
Agreement. The provisions of this SECTION 9.14 shall survive the expiration and
termination of this Agreement and the repayment of the Indebtedness.
74
9.15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
9.16. ESTOPPEL CERTIFICATES. Borrower agrees at any time and from
time to time, to execute, acknowledge and deliver to Lender, within five
Business Days after receipt of Lender's written request therefor, a statement in
writing setting forth (A) the unpaid principal amount of the Note, (B) the date
on which installments of interest and/or principal were last paid, (C) any
offsets or defenses to the payment of the Indebtedness, (D) that the Note, this
Agreement, the Deed of Trust and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification, and (E) such other matters as Lender may
reasonably request. Any prospective purchaser of any interest in a Loan shall be
permitted to rely on such certificate.
9.17. PAYMENT OF EXPENSES; MORTGAGE RECORDING TAXES. Borrower shall
reimburse Lender upon receipt of written notice from Lender for (i) all
reasonable out-of-pocket costs and expenses incurred by Lender (or any of its
affiliates) in connection with the origination of the Loan, including legal fees
and disbursements, accounting fees and the costs of the Appraisal, the
Engineering Report, the Qualified Title Insurance Policy, the Qualified Survey,
the Environmental Report and any other third-party diligence materials, (ii)
reasonable out-of-pocket costs and expenses incurred by Lender (or any of its
affiliates) in connection with (A) the administration of the Loan, including
confirming compliance with environmental and insurance requirements; (B) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Borrower or
by Lender; (C) filing and recording fees and expenses and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (D) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents or any Collateral;
(E) obtaining any Rating Confirmation required or requested by Borrower
hereunder; and (F) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "workout"
or of any insolvency or bankruptcy proceedings.
9.18. NO THIRD-PARTY BENEFICIARIES. This Agreement and the other
Loan Documents are solely for the benefit of Lender and Borrower, and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or to
enforce the performance or observance of any of the obligations contained herein
or therein. All conditions to the obligations of Lender to make the Loan
hereunder are imposed solely and exclusively for the benefit of Lender, and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof, and
no other Person shall under any circumstances be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in
75
whole or in part by Lender if, in Lender's sole discretion, Lender deems it
advisable or desirable to do so.
9.19. RECOURSE.
(a) Except as set forth in SECTION 9.19(b) (with respect to
Borrower and Sponsor), in the Environmental Indemnity, in the Cooperation
Agreement, in SECTION 5.18 (with respect to Borrower) and in SECTION 9.14 (with
respect to Borrower and Sponsor), no recourse shall be had for the Indebtedness
against any Affiliate of Borrower or any officer, director, employer, agent or
direct or indirect partner or member of Borrower or any such Affiliate and
recourse to Borrower shall be limited to the Liens of Lender on the Property and
the other Collateral.
(b) Borrower and the Sponsor (as evidenced by the Sponsor's
signature below) agree to jointly and severally indemnify Lender and hold Lender
harmless from and against any and all Damages to Lender (including the legal and
other expenses of enforcing the obligations of the Borrower and the Sponsor
under this SECTION 9.19(b)) resulting from or arising out of any of the
following (the "INDEMNIFIED LIABILITIES"):
(i) any intentional physical Waste with respect to the Property
committed or permitted by Borrower, the Sponsor or any of their respective
Affiliates;
(ii) any fraud or intentional misrepresentation committed by
Borrower, the Sponsor or any of their respective Affiliates;
(iii) the misappropriation or misapplication (in violation of the
provisions hereof or applicable Legal Requirements) by Borrower, the
Sponsor or any of their respective Affiliates of any funds (including
misappropriation or misapplication of Revenues, security deposits and/or
Loss Proceeds and the violation of the last sentence of SECTION 5.8(d));
(iv) any Transfer of Collateral or Change of Control which is
prohibited hereunder; and
(v) any breach by Borrower or the Sponsor of any representation
set forth in SECTION 4.28 of this Agreement or of any covenants set forth
in the Environmental Indemnity Agreement.
In addition, upon the occurrence of any filing by Borrower under the
Bankruptcy Code or any joining or colluding by Borrower or any of its Affiliates
(including Sponsor) in the filing of an involuntary case in respect of Borrower
under the Bankruptcy Code, the entire Indebtedness shall become fully recourse
to Borrower and shall be recourse to Sponsor in an amount equal to 10% of the
Loan Amount.
(c) The liability of the Sponsor and the Borrower under SECTION
9.19(b) shall be direct and immediate and not conditional or contingent upon the
pursuit of any remedies against Borrower or any other Person, nor against the
Collateral, and shall not be impaired or
76
limited by any event, including, without limitation, the following events, in
each case whether occurring with or without notice to the Sponsor or with or
without consideration:
(i) any extensions of time for performance required by any of the
Loan Documents or any extension or renewal of the Note;
(ii) any sale, assignment or foreclosure of the Note, the Deed of
Trust or any of the other Loan Documents or any sale or transfer of any or
all of the Property;
(iii) any change in the composition of Borrower including the
withdrawal or removal of the Sponsor from any current or future position of
ownership, management or control of Borrower;
(iv) the accuracy or inaccuracy of the representations made by
Borrower in any of the Loan Documents;
(v) the release of Borrower or of any other Person from
performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law,
Lender's voluntary act or otherwise; or
(vi) the modification of the terms of any one or more of the Loan
Documents.
The Sponsor acknowledges that Lender would not make the Loan but for the
personal liability undertaken by the Sponsor in this Agreement. The Sponsor
agrees that it shall not demand or accept any payment from Borrower in respect
of any amounts owing or paid by the Sponsor hereunder until one year and one day
after such time as the Indebtedness shall have been paid in full.
(d) The foregoing limitations on personal liability shall in no
way impair or constitute a waiver of the validity of the Note, the Indebtedness
secured by the Collateral, or the Liens on the Collateral, or the right of
Lender, as mortgagee or secured party, to foreclose and/or enforce its rights
with respect to the Collateral after an Event of Default. Nothing in this
Agreement shall be deemed to be a waiver of any right which Lender may have
under the United States Bankruptcy Code to file a claim for the full amount of
the debt owing to Lender by Borrower or to require that all Collateral shall
continue to secure all of the Indebtedness owing to Lender in accordance with
the Loan Documents. Lender may seek a judgment on the Note (and, if necessary,
name Borrower in such suit) as part of judicial proceedings to foreclose under
the Deed of Trust or to foreclose pursuant to any other Collateral Documents, or
as a prerequisite to any such foreclosure or to confirm any foreclosure or sale
pursuant to power of sale thereunder, and in the event any suit is brought on
the Note, or with respect to any Indebtedness or any judgment rendered in such
judicial proceedings, such judgment shall constitute a Lien on and will be and
can be enforced on and against the Collateral and the rents, profits, issues,
products and proceeds thereof. Nothing in this Agreement shall impair the right
of the Lender to accelerate the maturity of the Note upon the occurrence of an
Event of Default, nor shall anything in this Agreement impair or be construed to
impair the right of Lender to seek personal judgments, and to enforce all rights
and remedies under applicable law, jointly and severally, against any guarantors
to the extent allowed by any applicable guarantees. The provisions set
77
forth in this SECTION 9.19 are not intended as a release or discharge of the
obligations due under the Note or under any Collateral Documents, but are
intended as a limitation, to the extent provided in this Section, on Lender's
right to ▇▇▇ for a deficiency or seek a personal judgment against Borrower or
Sponsor.
9.20. RIGHT OF SET-OFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, Lender may from time to time, without presentment, demand, protest or
other notice of any kind (all of such rights being hereby expressly waived),
set-off and appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by Lender (including branches,
agencies or affiliates of Lender wherever located) to or for the credit or the
account of Borrower against the obligations and liabilities of Borrower to
Lender hereunder, under the Note, the other Loan Documents or otherwise,
irrespective of whether Lender shall have made any demand hereunder and although
such obligations, liabilities or claims, or any of them, may be contingent or
unmatured, and any such set-off shall be deemed to have been made immediately
upon the occurrence of an Event of Default even though such charge is made or
entered on the books of Lender subsequent thereto.
9.21. EXCULPATION OF LENDER. Lender neither undertakes nor assumes
any responsibility or duty to Borrower or any other party to select, review,
inspect, examine, supervise, pass judgment upon or inform Borrower or any third
party of (a) the existence, quality, adequacy or suitability of Appraisals of
the Property or other Collateral, (b) any environmental report, or (c) any other
matters or items, including, but not limited to, engineering, soils and seismic
reports which are contemplated in the Loan Documents. Any such selection,
review, inspection, examination and the like, and any other due diligence
conducted by Lender, is solely for the purpose of protecting Lender's rights
under the Loan Documents, and shall not render Lender liable to Borrower or any
third party for the existence, sufficiency, accuracy, completeness or legality
thereof.
9.22. SERVICER. Lender may delegate any and all rights and
obligations of Lender hereunder and under the other Loan Documents to the
Servicer upon written notice by Lender to Borrower, whereupon any notice or
consent from the Servicer to Borrower, and any action by Servicer on Lender's
behalf, shall have the same force and effect as if Servicer were Lender.
Provided no Event of Default has occurred and is continuing, Lender agrees that
it will not appoint a Prohibited Transferee to act a Servicer of the Loan;
PROVIDED that Lender shall be entitled to rely, at Lender's sole election, on a
written statement from a proposed servicer that it is not a Prohibited
Transferee (without making any further inquiry or investigation) and Lender
shall not be liable to Borrower or to any other Person if Lender shall appoint
such Person as Servicer and such Person that shall in fact be a Prohibited
Transferee notwithstanding the fact such Person delivered such a written
statement.
9.23 PRIOR AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND THERETO IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND ALL PRIOR AGREEMENTS AMONG OR
BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN, INCLUDING ANY TERM SHEETS AND
78
COMMITMENT LETTERS, ARE SUPERSEDED BY THE TERMS OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
79
IN WITNESS WHEREOF, Lender and Borrower are executing this Agreement
as of the date first above written.
LENDER:
ARCHON FINANCIAL, L.P.,
a Delaware limited partnership
By: Archon Financial, L.L.C.,
its general partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director
BORROWER:
GRAND CANAL SHOPS II, LLC,
a Delaware limited liability company
By: Grand Canal Shops Mall MM Subsidiary, Inc.,
its managing member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
ACKNOWLEDGED AND AGREED BY SPONSOR SOLELY TO THE
EXTENT OF THE EXPRESS OBLIGATIONS AND AGREEMENTS OF
SPONSOR HEREIN:
LAS VEGAS SANDS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
