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LOAN AGREEMENT
Dated as of July 1, 2003
Between
KC PROPCO, LLC,
as Borrower
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as Lender
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TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions......................................................1
Section 1.2 Principles of Construction......................................18
II. THE LOAN
Section 2.1 The Loan........................................................18
2.1.1 Agreement to Lend and Borrow....................................18
2.1.2 Single Disbursement to Borrower.................................18
2.1.3 The Note........................................................18
2.1.4 Use of Proceeds.................................................18
Section 2.2 Interest Rate...................................................19
2.2.1 Applicable Interest Rate........................................19
2.2.2 Interest Calculation............................................19
2.2.3 Determination of Interest Rate..................................19
2.2.4 Usury Savings...................................................21
Section 2.3 Loan Payments...................................................22
2.3.1 Payment Before Maturity Date....................................22
2.3.2 Payment on Maturity Date........................................23
2.3.3 Interest Rate and Payment after Default.........................23
2.3.4 Late Payment Charge.............................................24
2.3.5 Method and Place of Payment.....................................24
Section 2.4 Prepayments.....................................................24
2.4.1 Voluntary Prepayments...........................................24
2.4.2 Mandatory Prepayments...........................................26
2.4.3 Prepayments After Default.......................................27
Section 2.5 Taxes...........................................................28
III. REPRESENTATIONS AND WARRANTIES
Section 3.1 Borrower Representations........................................31
3.1.1 Organization....................................................32
3.1.2 Proceedings.....................................................32
3.1.3 No Conflicts....................................................32
3.1.4 Litigation......................................................32
3.1.5 Agreements......................................................33
3.1.6 Consents........................................................33
3.1.7 Title...........................................................33
3.1.8 No Plan Assets..................................................33
3.1.9 Compliance......................................................33
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3.1.10 Financial Information...........................................34
3.1.11 Condemnation....................................................34
3.1.12 Intentionally Omitted...........................................34
3.1.13 Separate Lots...................................................34
3.1.14 Assessments.....................................................34
3.1.15 Enforceability..................................................34
3.1.16 Assignment of Leases............................................34
3.1.17 Insurance.......................................................35
3.1.18 Licenses........................................................35
3.1.19 Intentionally Omitted...........................................35
3.1.20 Physical Condition..............................................35
3.1.21 Boundaries......................................................35
3.1.22 Leases..........................................................35
3.1.23 Filing and Recording Taxes......................................36
3.1.24 Single Purpose..................................................36
3.1.25 Tax Filings.....................................................39
3.1.26 Solvency........................................................39
3.1.27 Federal Reserve Regulations.....................................39
3.1.28 Organizational Chart............................................39
3.1.29 Bank Holding Company............................................39
3.1.30 No Other Debt...................................................40
3.1.31 Investment Company Act..........................................40
3.1.32 Access/Utilities................................................40
3.1.33 No Bankruptcy Filing............................................40
3.1.34 Full and Accurate Disclosure....................................40
3.1.35 Foreign Person..................................................40
3.1.36 Fraudulent Transfer.............................................40
3.1.37 No Change in Facts or Circumstances; Disclosure.................41
3.1.38 Management Agreement............................................41
3.1.39 Perfection of Accounts..........................................41
3.1.40 REA.............................................................41
3.1.41 Childcare Facilities............................................41
Section 3.2 Survival of Representations.....................................42
IV. BORROWER COVENANTS
Section 4.1 Borrower Affirmative Covenants..................................43
4.1.1 Existence; Compliance with Legal Requirements...................43
4.1.2 Taxes and Other Charges.........................................43
4.1.3 Litigation......................................................44
4.1.4 Access to Property..............................................44
4.1.5 Further Assurances; Supplemental Mortgage Affidavits............44
4.1.6 Financial Reporting.............................................44
4.1.7 Title to the Property...........................................46
4.1.8 Estoppel Statement..............................................46
4.1.9 Leases..........................................................46
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4.1.10 Alterations.....................................................46
4.1.11 Interest Rate Cap...............................................46
4.1.12 Material Agreements.............................................47
4.1.13 Performance by Borrower.........................................48
4.1.14 Costs of Enforcement/Remedying Defaults.........................48
4.1.15 Business and Operations.........................................48
4.1.16 Loan Fees.......................................................48
4.1.17 Fire and Zoning Code Violations.................................48
Section 4.2 Borrower Negative Covenants.....................................48
4.2.1 Due on Sale and Encumbrance; Transfers of Interests.............48
4.2.2 Liens...........................................................49
4.2.3 Dissolution.....................................................49
4.2.4 Change in Business..............................................49
4.2.5 Debt Cancellation...............................................49
4.2.6 Affiliate Transactions..........................................49
4.2.7 Zoning..........................................................49
4.2.8 Assets..........................................................49
4.2.9 No Joint Assessment.............................................49
4.2.10 Principal Place of Business.....................................50
4.2.11 ERISA...........................................................50
4.2.12 Material Agreements.............................................50
4.2.13 REA.............................................................50
4.2.14 Operating Lease.................................................50
4.2.15 Management Agreement............................................50
V. INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1 Insurance.......................................................51
5.1.1 Insurance Policies..............................................51
5.1.2 Insurance Company...............................................54
Section 5.2 Casualty and Condemnation.......................................54
5.2.1 Casualty........................................................54
5.2.2 Condemnation....................................................54
5.2.3 Casualty Proceeds...............................................55
Section 5.3 Delivery of Net Proceeds........................................55
5.3.1 Minor Casualty or Condemnation..................................55
5.3.2 Major Casualty or Condemnation..................................56
VI. RESERVE FUNDS
Section 6.1 Intentionally Omitted...........................................59
Section 6.2 Tax Funds.......................................................59
6.2.1 Deposits of Tax Funds...........................................59
6.2.2 Release of Tax Funds............................................59
Section 6.3 Insurance Funds.................................................60
6.3.1 Deposits of Insurance Funds.....................................60
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6.3.2 Release of Insurance Funds......................................60
Section 6.4 Capital Expenditure Funds.......................................60
6.4.1 Deposits of Capital Expenditure Funds...........................60
6.4.2 Release of Capital Expenditure Funds............................61
Section 6.5 Borrower Cash Collateral Funds..................................63
6.5.1 Deposits of Borrower Cash Collateral Funds......................63
6.5.2 Release of Borrower Cash Collateral Funds.......................63
Section 6.6 Operating Company Cash Collateral Funds.........................63
6.6.1 Deposits of Operating Company Cash Collateral Funds.............63
6.6.2 Release of Operating Company Cash Collateral Funds..............63
Section 6.7 Debt Service Reserve Funds......................................63
Section 6.8 Application of Reserve Funds....................................64
Section 6.9 Security Interest in Reserve Funds..............................64
6.9.1 Grant of Security Interest......................................64
6.9.2 Income Taxes....................................................64
6.9.3 Prohibition Against Further Encumbrance.........................64
Section 6.10 Letters of Credit...............................................64
6.10.1 Delivery of Letters of Credit...................................64
Section 6.11 Provisions Regarding Letters of Credit..........................65
6.11.1 Security for Debt...............................................65
6.11.2 Additional Rights of Lender.....................................66
VII. PROPERTY MANAGEMENT
Section 7.1 The Management Agreement........................................66
Section 7.2 Prohibition Against Termination or Modification.................67
Section 7.3 Replacement of Manager..........................................67
VIII. PERMITTED TRANSFERS
Section 8.1 Intentionally Omitted...........................................67
Section 8.2 Permitted Transfers of Interest in Borrower.....................67
IX. SALE AND SECURITIZATION OF MORTGAGE
Section 9.1 Sale of Mortgage and Securitization.............................68
Section 9.2 Securitization Indemnification..................................69
Section 9.3 Rating Surveillance.............................................71
Section 9.4 Trustee and Accounting Fees.....................................71
X. DEFAULTS
Section 10.1 Event of Default................................................72
Section 10.2 Remedies........................................................74
Section 10.3 Right to Cure Defaults..........................................75
Section 10.4 Remedies Cumulative.............................................76
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XI. MISCELLANEOUS
Section 11.1 Successors and Assigns..........................................76
Section 11.2 Lender's Discretion.............................................76
Section 11.3 Governing Law...................................................76
Section 11.4 Modification, Waiver in Writing.................................78
Section 11.5 Delay Not a Waiver..............................................78
Section 11.6 Notices.........................................................78
Section 11.7 Trial by Jury...................................................79
Section 11.8 Headings........................................................80
Section 11.9 Severability....................................................80
Section 11.10 Preferences.....................................................80
Section 11.11 Waiver of Notice................................................80
Section 11.12 Remedies of Borrower............................................80
Section 11.13 Expenses; Indemnity.............................................81
Section 11.14 Schedules Incorporated..........................................82
Section 11.15 Offsets, Counterclaims and Defenses.............................82
Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries...82
Section 11.17 Publicity.......................................................82
Section 11.18 Cross-Default; Cross-Collateralization; Waiver of Marshalling
of Assets.......................................................83
Section 11.19 Waiver of Offsets/Defenses/Counterclaims........................83
Section 11.20 Conflict; Construction of Documents; Reliance...................84
Section 11.21 Brokers and Financial Advisors..................................84
Section 11.22 Exculpation.....................................................84
Section 11.23 Prior Agreements................................................86
Section 11.24 Servicer........................................................86
Section 11.25 Joint and Several Liability.....................................87
Section 11.26 Creation of Security Interest...................................87
Section 11.27 Assignments and Participations..................................87
Section 11.28 Property Releases...............................................88
Section 11.29 Property Substitutions..........................................89
11.29.1 Conditions to Substitution......................................89
11.29.2 Release and Substitution........................................95
SCHEDULES
Schedule I - Qualified Transferees
Schedule II - Required Repairs
Schedule III - Organizational Chart
Schedule IV - List of Leases
Schedule V - Form of Interest Rate Cap Confirmation
Schedule VI - Liens Referenced in Section 3.1.7
Schedule VII - Amortization Schedule
Schedule VIII - List of Properties and Allocated Loan Amounts
Schedule IX - Amortization Schedule for Extension Term if Debt Service
Coverage Ratio on Election Date is Less than 2.5:1.0
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Schedule X - Insurance Claims
Schedule XI - Intentionally Omitted
Schedule XII - Insolvency Opinion
Schedule XIII - Insurance Deductibles
Schedule XIV - Fire and Zoning Code Violations
Schedule XV - Section 2.5 Certificate
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 1, 2003 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a New York
corporation, having an address at 1221 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender") and KC PROPCO, LLC, a Delaware limited liability
company having an address at c/o KinderCare Learning Centers, Inc., ▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Legal Dept.
("Borrower").
All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.
W I T N E S S E T H:
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WHEREAS, Borrower desires to obtain the Loan from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the conditions and terms of this Agreement and the other
Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided:
"Additional Interest" shall have the meaning set forth in Section
2.4.1(e).
"Affiliate" shall mean, as to any Person, any other Person that,
directly or indirectly, owns more than forty percent (40%) of, is in control of,
is controlled by or is under common ownership or control with such Person or is
a director or officer of such Person or of an Affiliate of such Person. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agent" shall mean ▇▇▇▇▇ Fargo Bank, National Association, and any
successor Eligible Institution thereto.
"Allocated Loan Amount" shall mean the portion of the Loan allocated
to each Individual Property, as set forth on Schedule VIII.
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"Allocated NOI Amount" shall mean the portion of the Net Operating
Income for the Property as of the Closing Date allocated to each Individual
Property, as set forth on Schedule VIII.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Budget" shall mean the operating and capital budget for each
Individual Property setting forth Borrower's good faith estimate of Gross
Revenue, Total Operating Expenses, and Capital Expenditures for the applicable
Fiscal Year.
"Annual Debt Service Payment Amount" shall mean, as of any date, the
amount of all principal and interest which will become due under the Loan during
the following twelve (12) month period, assuming an Applicable Interest Rate
equal to the Capped LIBOR Rate.
"Annual Operating Lease Rent Amount" shall mean, as of any date, the
amount of rent due from Operating Company to Borrower pursuant to the Operating
Lease during the following twelve (12) month period.
"Applicable Interest Rate" shall mean 3.37% per annum for the initial
Interest Period and thereafter either (i) LIBOR plus the Spread with respect to
any period when the Loan is a LIBOR Loan or (ii) the Substitute Rate plus the
Substitute Spread with respect to any period when the Loan is a Substitute Rate
Loan.
"Assignment of Leases" shall mean, with respect to each state where
any Individual Property is located, that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"Assignment of Management Agreement" shall mean that certain
Assignment and Subordination of Management Agreement and Management Fees dated
the date hereof among Borrower, Operating Company, Manager and Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Assignment of Protection Agreement" shall mean that certain
Assignment of Interest Rate Protection Agreement of even date herewith between
Borrower and Lender and acknowledged by the Counterparty and any other
Assignment of Interest Rate Protection Agreement hereafter delivered.
"Assumed Note Rate" shall have the meaning set forth in Section
2.4.1(e).
"Award" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of any
Individual Property.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.
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"Basic Carrying Costs" shall mean the sum of the following costs
associated with the Property for the relevant Fiscal Year or payment period: (i)
Taxes and (ii) Insurance Premiums.
"beneficial owners" shall have the meaning set forth in Section
2.5(f)(5).
"Borrower" shall mean KC Propco, LLC, a Delaware limited liability
company, together with its permitted successors and permitted assigns.
"Borrower Cash Collateral Funds" shall have the meaning set forth in
Section 6.5.1.
"Borrower Excess Cash Flow" shall mean all sums remaining on deposit
in the Operating Lease Rent Account, together with all interest accrued thereon,
after the payment of all sums required to be paid pursuant to Sections 3.3(b)(i)
and (ii) of the Cash Management Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in (i)
the State of New York, (ii) the state where the corporate trust office of the
Trustee is located, or (iii) the state where the servicing offices of the
Servicer are located.
"Capital Expenditures" for any period shall mean amounts expended for
replacements and alterations to the Property and required to be capitalized
according to GAAP.
"Capital Expenditure Funds" shall have the meaning set forth in
Section 6.4.1.
"Capital Expenditures Work" shall mean any labor performed or
materials installed in connection with any Capital Expenditure.
"Capped LIBOR Rate" shall mean, with respect to any Interest Rate
Protection Agreement in effect with respect to the Loan for the period from the
Closing Date through July 8, 2006, 6.50%, and with respect to any Interest Rate
Protection Agreement in effect with respect to the Loan thereafter, 7.00%.
"Cash Management Agreement" shall mean that certain Cash Management
Agreement of even date herewith among Lender, Borrower, Operating Company,
Manager and Agent.
"Casualty" shall mean the occurrence of any casualty, damage or
injury, by fire or otherwise, to any Individual Property or any part thereof.
"Casualty Consultant" shall have the meaning set forth in Section
5.3.2(c).
"Casualty Release Amount" shall have the meaning set forth in Section
2.4.2.
"Casualty Retainage" shall have the meaning set forth in Section
5.3.2(d).
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"Closing Date" shall mean the date of funding the Loan.
"Code" shall mean 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.
"Condemnation" shall mean a permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of any Individual
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting any Individual Property or
any part thereof.
"Controllable Expenses" shall mean all expenses for labor, food,
educational supplies, equipment replacement, office supplies, training,
janitorial services, repair and maintenance, utilities, local marketing
programs, telephone, vehicle expenses, bad debt, program materials, gas, oil,
maintenance, field trip costs, activity costs, promotional expenses, recruiting,
insurance and other miscellaneous expenses directly related to the operation of
the Property as an early childhood care and educational center.
"Counterparty" shall mean (a) the counterparty under the Interest Rate
Protection Agreement or (b) a Person that guarantees such counterparty's
obligations under the Interest Rate Protection Agreement or otherwise provides
to such counterparty credit support acceptable to Lender or, after a
Securitization, the Rating Agencies, provided, however, that such guarantor
shall be deemed the "Counterparty" for so long as the long-term credit rating
issued by the Rating Agencies to such guarantor is better than the long-term
credit rating of the actual counterparty under the Interest Rate Protection
Agreement.
"Covered Disclosure Information" shall have the meaning set forth in
Section 9.2.
"Debt" shall mean the outstanding principal amount of the Loan
together with all interest accrued and unpaid thereon (including, without
limitation, any interest that would be due pursuant to the terms hereof on the
outstanding principal amount of the Loan through and including the end of any
applicable Interest Period, even if such Interest Period extends beyond any
applicable Monthly Payment Date, Prepayment Date or the Maturity Date) and all
other sums (including, without limitation, the Spread Maintenance Premium and
any Breakage Costs) due to Lender in respect of the Loan under the Note, this
Agreement, the Mortgage, the Environmental Indemnity or any other Loan Document.
"Debt Service" shall mean, with respect to any particular period of
time, scheduled principal and interest payments under the Note.
"Debt Service Coverage Ratio" shall mean, as of the relevant date, the
ratio of (i) Net Operating Income for the twelve (12) calendar month period
immediately preceding the date of calculation to (ii) the projected Debt Service
that would be due for the twelve (12) calendar month period immediately
following such calculation assuming a loan constant of nine percent (9.00%) per
annum.
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"Debt Service Reserve Funds" shall have the meaning set forth in
Section 6.7.
"Default" shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii)
five percent (5.00%) above the Applicable Interest Rate.
"Determination Date" shall mean, with respect to each Interest Period,
the date that is two (2) London Business Days prior to the fourteenth (14th) day
of the calendar month in which such Interest Period commences.
"Disclosure Document" shall have the meaning set forth in Section
9.2(a).
"Election Date" shall have the meaning set forth in Section 2.3.2(b).
"Eligible Account" shall mean an identifiable account which is
separate from all other funds held by the holding institution that is either (a)
an account or accounts maintained with the corporate trust department of a
federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution or (b) a segregated trust
account or accounts maintained with the corporate trust department of a federal
or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company is subject to regulations substantially similar to
12 C.F.R. ss.9.10(b), having in either case a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"Eligible Institution" shall mean a federal or state chartered
depository institution or trust company insured by the Federal Deposit Insurance
Corporation the short term unsecured debt obligations or commercial paper of
which are rated at least A-1 by S&P and P-1 by Moody's in the case of accounts
in which funds are held for thirty (30) days or less or, in the case of Letters
of Credit or accounts in which funds are held for more than thirty (30) days,
the long term unsecured debt obligations of which are rated at least "AA" by S&P
and "Aa2" by Moody's.
"Environmental Indemnity" shall mean that certain Environmental
Indemnity Agreement dated as of the date hereof executed by Borrower in
connection with the Loan for the benefit of Lender.
"Equipment" shall have the meaning set forth in the granting clause of
the Mortgage.
"ERISA" shall have the meaning set forth in Section 3.1.8.
"Event of Default" shall have the meaning set forth in Section 10.1.
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"Exchange Act" shall have the meaning set forth in Section 9.2(a).
"Excluded Taxes" shall have the meaning set forth in Section 2.5(f).
"Excusable Delay" shall mean a delay due to acts of God, governmental
restrictions, stays, judgments, orders, decrees, enemy actions, acts of
terrorism, epidemics, quarantine restrictions, civil commotion, fire, casualty,
strikes, work stoppages, shortages of labor or materials or other causes beyond
the reasonable control of Borrower, but lack of funds in and of itself shall not
be deemed a cause beyond the control of Borrower.
"Fiscal Quarter" shall have the meaning set forth in the definition of
Fiscal Year.
"Fiscal Year" shall mean each period commencing on the calendar day
following the Friday closest to May 31 of each calendar year and ending on the
Friday closest to the following May 31 during the term of the Loan. Each Fiscal
Year shall be comprised of four (4) quarters (each a "Fiscal Quarter"), the
first of which shall begin on the calendar day (Saturday) next following the
Friday closest to May 31 of each calendar year and shall end on the Friday which
is sixteen (16) weeks from such date, the second of which shall begin on the
calendar day (Saturday) following the end of the first Fiscal Quarter and shall
end on the Friday which is twelve (12) weeks from such date, the third of which
shall begin on the calendar day (Saturday) following the end of the second
Fiscal Quarter and shall end on the Friday which is twelve (12) weeks from such
date, and the fourth of which shall begin on the calendar day (Saturday)
following the end of the third Fiscal Quarter and shall end on the Friday
closest to the May 31 next following.
"Foreign Taxes" shall have the meaning set forth in Section 2.2.3(d).
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever or any governmental
▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether
now or hereafter in existence.
"Gross Revenue" shall mean all revenue, derived from the ownership
and/or operation of the Property from whatever source, including, but not
limited to, tuition, fees and miscellaneous other revenue, and all income and
proceeds from judgments, settlements and other forms of dispute resolution to
the extent such amounts are received in replacement of lost revenue which
Borrower or Operating Company would have otherwise received in the ordinary
course of business and which would have been included in this definition of
"Gross Revenue" including interest on such amounts, but excluding sales, use and
occupancy or other taxes on receipts required to be accounted for by the owner
or operator of the Property to any Governmental Authority, non-recurring
revenues as determined by Lender in good faith, payments received by Borrower
under the Interest Rate Protection Agreement, proceeds from the
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sale or refinancing of any Individual Property, security deposits, refunds and
uncollectible accounts, proceeds of casualty insurance and Awards (other than
business interruption or other loss of income insurance related to business
interruption or loss of income for the period in question), any disbursements to
Borrower or any operator of the Property from the Reserve Funds or any other
fund established by the Loan Documents, any interest on credit accounts and any
interest on the Reserve Funds.
"Guarantor" shall mean KinderCare Learning Centers, Inc., a Delaware
corporation.
"Guaranty" shall mean that certain Guaranty of even date herewith from
Guarantor for the benefit of Lender.
"Immaterial Lease" shall mean (a) the Leases listed on Schedule IV
which are noted to be Immaterial Leases, (b) any similar Lease which permits the
tenant thereunder to use, for childcare or early education related services, not
more than 20% of any building located on any Individual Property during
Operating Company's normal business hours, and (c) any Lease which permits the
tenant to use any portion of any Individual Property after Operating Company's
normal business hours; provided however, that any such Immaterial Lease shall
not adversely impact the operations or financial performance of the KinderCare
child care center located on the Individual Property as reasonably determined by
the Manager.
"Improvements" with respect to each Individual Property, shall have
the meaning set forth in the granting clause of the applicable Mortgage.
"Indebtedness" shall mean, for any Person, without duplication: (i)
all indebtedness of such Person for borrowed money, for amounts drawn under a
letter of credit, or for the deferred purchase price of property for which such
Person or its assets is liable, (ii) all unfunded amounts under a loan
agreement, letter of credit, or other credit facility for which such Person
would be liable if such amounts were advanced thereunder, (iii) all amounts
required to be paid by such Person as a guaranteed payment to partners or a
preferred or special dividend, including any mandatory redemption of shares or
interests, (iv) all indebtedness guaranteed by such Person, directly or
indirectly, (v) all obligations under leases that constitute capital leases for
which such Person is liable, and (vi) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements,
in each case whether such Person is liable contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss.
"Indemnified Liabilities" shall have the meaning set forth in Section
11.13(b).
"Independent Director" shall have the meaning set forth in Section
3.1.24(p).
"Individual Property" shall mean the parcel of real property located
at each address listed on Schedule VIII, the Improvements thereon and all
personal property owned by Borrower and encumbered by a Mortgage, together with
all rights pertaining to such property and Improvements, all as more
particularly described in the Granting Clauses of the applicable Mortgage.
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"Initial Trigger Event" shall mean, on the relevant date, the fact
that the annual Net Operating Income tested as of the end of each Fiscal Quarter
is less than the Initial Trigger NOI Amount but equal to or greater than the
Secondary Trigger NOI Amount.
"Initial Trigger NOI Amount" shall mean, as of any date, an amount
equal to Sixty Million and No/100 Dollars ($60,000,000.00) less seventy five
percent (75%) of the Allocated NOI Amount of each Individual Property previously
released from the lien of the Mortgage pursuant to Section 11.28.
"Initial Trigger Period" shall mean a period commencing on the first
(1st) Business Day after an Initial Trigger Event has occurred through the
earlier of (a) the first (1st) Business Day after the related Initial Trigger
Event has not existed for a period of two (2) consecutive Fiscal Quarters or (b)
the occurrence of a Secondary Trigger Event.
"Insolvency Opinion" shall mean that certain bankruptcy
nonconsolidation opinion letter dated the date hereof delivered by Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP in connection with the Loan, a true and correct copy of
which is attached hereto as Schedule XIII.
"Insurance Funds" shall have the meaning set forth in Section 6.3.1.
"Insurance Premiums" shall have the meaning set forth in Section
5.1.1(b).
"Interest Period" shall mean (a) for the first interest period
hereunder, (i) if the Closing Date occurs on or before the thirteenth (13th) day
of a calendar month, the period commencing on the Closing Date and ending on
(and including) the thirteenth (13th) day of the calendar month in which the
Closing Date occurs, and (ii) if the Closing Date occurs after the thirteenth
(13th) day of a calendar month, the period commencing on the Closing Date and
ending on (and including) the thirteenth (13th) day of the following calendar
month and (b) for each interest period thereafter commencing July 14, 2003, the
period commencing on the fourteenth (14th) day of each calendar month and ending
on (and including) the thirteenth (13th) day of the following calendar month.
Each Interest Period as set forth in clause (b) above shall be a full month and
shall not be shortened by reason of any payment of the Loan prior to the
expiration of such Interest Period.
"Interest Rate Protection Agreement" shall mean one or more interest
rate caps (together with the schedules relating thereto) in form and substance
reasonably satisfactory to Lender, with a confirmation from the Counterparty in
the form attached hereto as Schedule V, between Borrower and, subject to Section
4.1.11, a Counterparty reasonably acceptable to Lender with a Minimum
Counterparty Rating, and all amendments, restatements, replacements, supplements
and modifications thereto.
"Lease" shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in any
Individual Property, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the
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performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto, including, without
limitation, the Operating Lease.
"Legal Requirements" shall mean all federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting
Borrower, Operating Company, Manager or any Individual Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, including, without
limitation, the Americans with Disabilities Act of 1990, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting any Individual
Property or any part thereof, including, without limitation, any which may (i)
require repairs, modifications or alterations in or to any Individual Property
or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
"Lender" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, together with its successors, and any assignee of or participant in
the Loan.
"Lender Indemnitees" shall have the meaning set forth in Section
11.13(b).
"Lender's Estimate" shall have the meaning set forth in Section 2.4.2.
"Lender's Notice" shall have the meaning set forth in Section
2.2.3(b).
"Letter of Credit" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Lender and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Lender and entitling Lender to draw thereon in New York, New York
(based solely on a statement executed by an officer or authorized signatory of
Lender, in form and substance reasonably satisfactory to Lender), issued by a
domestic Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution.
"Liabilities" shall have the meaning set forth in Section 9.2(b).
"LIBOR" shall mean, with respect to each Interest Period, the rate
(expressed as a percentage per annum and rounded upward, if necessary, to the
next nearest 1/1000 of 1.00%) for deposits in U.S. dollars, for a one-month
period, that appears on Telerate Page 3750 (or the successor thereto) as of
11:00 a.m., London time, on the related Determination Date. If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such
Determination Date, LIBOR shall be the arithmetic mean of the offered rates
(expressed as a percentage per annum) for deposits in U.S. dollars for a
one-month period that appear on the Reuters Screen Libor Page as of 11:00 a.m.,
London time, on such Determination Date, if at least two such offered rates so
appear. If fewer than two such offered rates appear on the Reuters Screen Libor
Page as of 11:00 a.m., London time, on such Determination Date, Lender shall
request the principal London Office of any four major reference banks in the
London interbank market selected by Lender to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London time, on such Determination Date for the then
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outstanding principal amount of the Loan. If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, Lender shall
request any three major banks in New York City selected by Lender to provide
such bank's rate (expressed as a percentage per annum) for loans in U.S. dollars
to leading European banks for a one-month period as of approximately 11:00 a.m.,
New York City time on the applicable Determination Date for the then outstanding
principal amount of the Loan. If at least two such rates are so provided, LIBOR
shall be the arithmetic mean of such rates. LIBOR shall be determined by Lender
or its agent and at Borrower's request, Lender shall provide Borrower with the
basis for its determination.
"LIBOR Loan" shall mean the Loan at any time in which the Applicable
Interest Rate is calculated at LIBOR plus the Spread in accordance with the
provisions of Article II hereof.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting the Property or any portion thereof or Borrower,
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"Loan" shall mean the loan in the original principal amount of Three
Hundred Million and No/100 Dollars ($300,000,000.00) made by Lender to Borrower
pursuant to this Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Assignment of Leases, the Cash Management Agreement, the
Environmental Indemnity, the Guaranty, the Assignment of Protection Agreement,
the Non-Competition Agreement, the Assignment of Management Agreement and any
other document pertaining to the Property as well as all other documents now or
hereafter executed and/or delivered in connection with the Loan, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Loan Year" shall mean a period commencing on July 9 of each calendar
year and ending on July 8 of the following calendar year.
"London Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which commercial banks in London, England or New York, New
York are not open for business.
"Management Agreement" shall mean the management agreement entered
into by and between Operating Company and the Manager, pursuant to which the
Manager is to provide management and other services with respect to the
Property.
"Manager" shall mean KinderCare Learning Centers, Inc., a Delaware
corporation, or any other manager approved in accordance with the terms and
conditions of the Loan Documents.
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"Material Agreements" means each contract and agreement relating to
the ownership, management, development, use, operation, leasing, maintenance,
repair or improvement of any one (1) or more Individual Properties, other than
the Management Agreement and the Leases, under which there is an obligation of
Borrower to pay more than $500,000.00 per annum.
"Maturity Date" shall mean July 9, 2008 or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Minimum Counterparty Rating" shall mean (a) a short term credit
rating from S&P of at least "A-1" and (b) either (i) a long term credit rating
from Moody's of at least "Aa3" or (ii) a long term credit rating from Moody's of
at least "A1" and a short term credit rating from Moody's of "P-1".
"Minimum Disbursement Amount" shall mean Twenty-Five Thousand and
No/100 Dollars ($25,000).
"Monthly Payment Date" shall mean the ninth (9th) calendar day of each
calendar month during the term of the Loan, and if such day is not a Business
Day, then the Business Day immediately preceding such day, commencing on July 9,
2003 and continuing to and including the Maturity Date.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" shall mean Lender and its Affiliates.
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group" shall have the meaning set forth in Section
9.2(b).
"Mortgage" shall mean, with respect to each state where any Individual
Property is located, that certain first priority Mortgage, Deed of Trust or Deed
to Secure Debt, dated the date hereof, executed and delivered by Borrower as
security for the Loan and encumbering each Individual Property located in such
state, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Net Operating Income" shall mean Net Revenues minus Total Operating
Expenses.
"Net Proceeds" shall mean: (i) the net amount of all insurance
proceeds payable as a result of a Casualty to the Individual Property, after
deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such insurance proceeds, or
(ii) the net amount of the Award, after deduction of reasonable costs and
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expenses (including, but not limited to, reasonable attorneys' fees), if any, in
collecting such Award.
"Net Proceeds Deficiency" shall have the meaning set forth in Section
5.3.2(f).
"Net Revenues" shall mean all Gross Revenue obtained by Operating
Company in connection with the operation of the Property less any discounts
returned to customers and pupils.
"Non-Excluded Taxes" shall have the meaning set forth in Section
2.5(a).
"Non-U.S. Corporate Lender" shall have the meaning set forth in
Section 2.5(f).
"Note" shall have the meaning set forth in Section 2.1.3.
"Notice" shall have the meaning set forth in Section 11.6.
"Officer's Certificate" shall mean a certificate delivered to Lender
by Borrower which is signed by an authorized senior officer of Borrower.
"Operating Agreements" shall mean the REA, including any other
covenants, restrictions or agreements of record relating to the construction,
operation or use of any Individual Property.
"Operating Company" shall mean KC Opco, LLC, a Delaware limited
liability company.
"Operating Company Cash Collateral Funds" shall have the meaning set
forth in Section 6.6.1.
"Operating Company Excess Cash Flow" shall mean all sums remaining on
deposit in the Deposit Account, together with all interest accrued thereon,
after the payment of all sums required pursuant to Sections 3.3(a)(i) through
(v) of the Cash Management Agreement.
"Operating Lease" shall mean that certain Agreement of Lease between
Borrower and Operating Company dated the date hereof, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Other Charges" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against any Individual Property or any part thereof.
"Other On-Site Expenses" shall mean all capital lease interest, taxes
and license fees, and rent under any leased assets used in conjunction with the
operation of the Property.
"Other Taxes" shall have the meaning set forth in Section 2.5(b).
"Otherwise Rated Insurer" shall have the meaning set forth in Section
5.1.2.
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"Permitted Encumbrances" shall mean, collectively, (i) the Liens and
security interests created by the Loan Documents, (ii) all Liens, encumbrances
and other matters disclosed in the Title Insurance Policy, (iii) Liens, if any,
for Taxes imposed by any Governmental Authority or Other Charges not yet
delinquent, (iv) Liens in respect of property or assets incurred in the ordinary
course of business, including, without limitation, liens incurred by operation
of law, judgment liens, carriers', warehousemen's, mechanic's, materialmen's,
repairmen's and other similar Liens, all of which are being diligently contested
in good faith in accordance with Section 4.1.2 hereof, (v) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar encumbrances entered into by Borrower in the ordinary course of business
which in each case and in the aggregate do not have a material adverse effect on
the value or operation of the Property or affect the validity, enforceability or
priority of the Liens created by the Loan Documents and (vi) such other title
and survey exceptions as Lender has approved or may approve in Lender's sole
discretion.
"Permitted Investments" shall have the meaning set forth in the Cash
Management Agreement.
"Permitted Prepayment Date" shall mean July 9, 2005.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Physical Conditions Report" shall mean, with respect to one half of
the Individual Properties, a report prepared by a company satisfactory to Lender
regarding the physical condition of such Individual Property, satisfactory in
form and substance to Lender in its sole discretion, which reports shall, among
other things, (i) confirm that the applicable Individual Property and its use
comply, in all material respects, with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and (ii)
include a copy of a final certificate of occupancy with respect to all
Improvements.
"Policies" shall have the meaning specified in Section 5.1.1(b).
"Prepayment Date" shall mean the date on which the Loan is prepaid in
accordance with the terms hereof.
"Prepayment Fee" shall mean, with respect to any prepayment except for
a mandatory prepayment in accordance with Section 2.4.2 received by Lender from
and after the Permitted Prepayment Date through and including July 8, 2006, an
amount equal to three (3.00%) of the amount prepaid, with respect to any
prepayment received by Lender from and after July 9, 2006 through and including
July 8, 2007, an amount equal to two (2.00%) of the amount prepaid, and with
respect to any prepayment received by Lender from and after July 9, 2007 through
and including January 8, 2008, an amount equal to one percent (1.00%) of the
amount prepaid.
"Prescribed Laws" shall mean, collectively, (a) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of
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2001 (Public Law 107-56) (The USA PATRIOT Act), (b) Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism, (c) the International Emergency Economic Power
Act, 50 U.S.C. ss.1701 et. seq. and (d) all other Legal Requirements relating to
money laundering or terrorism.
"Property" shall mean, collectively, the Individual Properties listed
on Schedule VIII.
"Qualified Transferee" shall mean (i) a real estate investment trust,
bank, financial institution, 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,
(ii) investment company, money management firm or "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act of 1933, as
amended, or an institutional "accredited investor" within the meaning of
Regulation D under the Securities Act of 1933, as amended, which is regularly
engaged in the business of making or owning mezzanine loans or loans of similar
types to the Loan, (iii) an investment fund, limited liability company, limited
partnership or general partnership (a "Permitted Investment Fund") where a
Qualified Transferee or an entity which is not subject to a bankruptcy
proceeding and is a nationally-recognized manager of investment funds investing
in debt or equity interests which is investing through a fund which has
committed capital of at least $250,000,000 acts as the general partner, managing
member or fund manager and at least 50% of the equity interests in such
Permitted Investment Fund are owned, directly or indirectly, by one or more of
the following: a Qualified Transferee, an institutional "accredited investor",
within the meaning of Regulation D promulgated under the Securities Act of 1933,
as amended, and/or a "qualified institutional buyer" or both within the meaning
of Rule 144A promulgated under the Securities Exchange Act of 1934 (provided
each institutional "accredited investor" or "qualified institutional buyer"
meets the test set forth in clause (v) (A) below), as amended, (iv) any other
lender or entity (including any opportunity funds) regularly engaged in the
business of making mortgage, mezzanine or corporate loans which has been
approved as a Qualified Transferee hereunder by the Rating Agencies, (v) an
institution substantially similar to any of the foregoing entities described in
clauses (i) or (ii) of this definition, and as to each of the entities described
in clauses (i), (ii) and (v) provided such entity (A) has total assets (in name
or under management) in excess of $650,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder's equity of $250,000,000; and (B) is regularly engaged in the
business of making or owning corporate loans, commercial real estate loans or
commercial loans secured by a pledge of interests in a mortgage borrower, (vi)
any entity listed on Schedule I hereto or (vii) any entity Controlled (as
defined below) by any one or more of the entities described in this definition.
For purposes of this definition only, "Control" means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interest of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise.
"Rating Agencies" shall mean, prior to the final Securitization of the
Loan, each of S&P and Moody's, or any other nationally-recognized statistical
rating agency which has been
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designated by Lender and, after the final Securitization of the Loan, shall mean
any of the foregoing that have rated any of the Securities.
"Rating Agency Confirmation" shall mean a written affirmation from
each of the Rating Agencies that the credit rating of the Securities by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.
"Rating Surveillance Charge" shall have the meaning set forth in
Section 9.3.
"Register" shall have the meaning set forth in Section 11.27(c).
"Registration Statement" shall have the meaning set forth in Section
9.2(b).
"Release Amount" shall have the meaning set forth in Section 11.28(c).
"Release Date" shall have the meaning set forth in Section 11.28(b).
"Release Property" shall have the meaning set forth in Section 11.28.
"REA" shall mean, collectively, as the same may be amended, restated,
supplemented or otherwise modified from time to time, any construction,
operating and reciprocal easement agreements to which Borrower's ownership is
subject at any Individual Property.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System from time to time in effect, including any successor
or other Regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Rents" shall mean all rents, moneys payable as damages or in lieu of
rent, revenues, deposits (including, without limitation, security, utility and
other deposits), accounts, cash, issues, profits, charges for services rendered,
and other consideration of whatever form or nature received by or paid to or for
the account of or benefit of Borrower or its agents or employees from any and
all sources arising from or attributable to the Property.
"Required Debt Service Reserve Deposit" shall have the meaning set
forth in Section 6.7.
"Required Repairs" shall mean, with respect to each Individual
Property, the repairs listed on Schedule II.
"Reserve Funds" shall mean, collectively, the Capital Expenditure
Funds, the Insurance Funds, the Tax Funds, the Borrower Cash Collateral Funds,
the Operating Company Cash Collateral Funds and the Debt Service Reserve Funds.
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"Restoration" shall have the meaning set forth in Section 5.2.1.
"Restoration Threshold" shall mean Five Million and No/100 Dollars
($5,000,000.00).
"S&P" shall mean Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Secondary Market Transaction" shall have the meaning set forth in
Section 9.1(a).
"Secondary Trigger Event" shall mean, on the relevant date, the fact
that the annual Net Operating Income tested as of the end of each Fiscal Quarter
is less than the Secondary Trigger NOI Amount.
"Secondary Trigger NOI Amount" shall mean an amount equal to Fifty
Million and No/100 Dollars ($50,000,000.00).
"Secondary Trigger Period" shall mean a period commencing on the first
(1st) Business Day after a Secondary Trigger Event has occurred through the
first (1st) Business Day after the related Secondary Trigger Event has not
existed for a period of two (2) consecutive Fiscal Quarters.
"Section 2.5 Certificate" shall have the meaning set forth in Section
2.5(f)(2).
"Section 2.5 Taxes" shall have the meaning set forth in Section
2.5(a).
"Securities" shall have the meaning set forth in Section 9.1(a).
"Securities Act" shall have the meaning set forth in Section 9.2(a).
"Securitization" shall have the meaning set forth in Section 9.1(a).
"Servicer" shall have the meaning set forth in Section 11.24.
"Servicing Agreement" shall have the meaning set forth in Section
11.24.
"Severed Loan Documents" shall have the meaning set forth in Section
10.2(c).
"Spread" shall mean two hundred twenty five (225) basis points.
"Spread Maintenance Premium" shall mean, in connection with a
prepayment of all or any portion of the outstanding principal balance of the
Loan pursuant to Section 2.3.3 or Section 2.4.3 hereof, an amount equal to the
present value, discounted at LIBOR on the most recent Determination Date with
respect to any period when the Loan is a LIBOR Loan (or, with respect to any
period when the Loan is a Substitute Rate Loan, discounted at an interest rate
that Lender believes, in its judgment, would equal LIBOR on such Determination
Date if LIBOR was then available), of all future installments of interest which
would have been due hereunder through and including the end of the Interest
Period in which the Permitted Prepayment Date
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occurs, on the portion of the outstanding principal balance of the Loan being
prepaid as if interest accrued on such portion of the principal balance being
prepaid at an interest rate per annum equal to the Spread. The Spread
Maintenance Premium shall be calculated by Lender and shall be final absent
manifest error.
"State" shall mean, with respect to any Individual Property, the State
or Commonwealth in which such Individual Property or any part thereof is
located.
"Substitute Allocated Loan Amount" shall have the meaning set forth in
Section 11.29.1(f).
"Substitute Property" shall have the meaning set forth in Section
11.29.1.
"Substitute Rate" shall have the meaning set forth in Section
2.2.3(b).
"Substitute Rate Loan" shall mean the Loan at any time in which the
Applicable Interest Rate is calculated at the Substitute Rate plus the
Substitute Spread in accordance with the provisions of Article II hereof.
"Substitute Spread" shall have the meaning set forth in Section
2.2.3(b).
"Substituted Property" or "Substituted Properties" shall have the
meaning set forth in Section 11.29.1.
"Survey" shall mean, with respect to any Individual Property, a survey
of such Individual Property prepared by a surveyor licensed in the State and
satisfactory to Lender and the company or companies issuing the Title Insurance
Policy, and containing a certification of such surveyor satisfactory to Lender.
"Tax Funds" shall have the meaning set forth in Section 6.2.1.
"Taxes" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof, together with all
interest and penalties thereon.
"Tenant" shall mean any Person obligated by contract or otherwise to
pay monies (including a percentage of gross income, revenue or profits) under
any Lease now or hereafter affecting all or any part of any Individual Property.
"Title Insurance Policy" shall mean, with respect to each Individual
Property, an ALTA mortgagee title insurance policy in the form acceptable to
Lender issued with respect to such Individual Property and insuring the lien of
the Mortgage encumbering such Individual Property.
"Total Operating Expenses" shall mean all Controllable Expenses and
Other On-Site Expenses, but specifically excluding (a) depreciation and
amortization and (b) any Capital Expenditures.
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"Transfer" shall have the meaning set forth in Section 4.2.1.
"Trustee" shall mean any trustee holding the Loan in a Securitization.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State.
"Underwriter Group" shall have the meaning set forth in Section
9.2(b).
"Updated Information" shall have the meaning set forth in Section
9.1(b)(i).
"U.S. Obligations" shall mean direct full faith and credit obligations
of the United States of America that are not subject to prepayment, call or
early redemption.
Section 1.2 Principles of Construction.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined.
II. THE LOAN
Section 2.1 The Loan.
2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrower and Borrower
shall accept the Loan from Lender on the Closing Date.
2.1.2 Single Disbursement to Borrower. Borrower shall receive only one
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note. The Loan shall be evidenced by that certain Promissory
Note of even date herewith, in the stated principal amount of Three Hundred
Million and No/100 Dollars ($300,000,000.00) executed by Borrower and payable to
the order of Lender in evidence of the Loan (as the same may hereafter be
amended, supplemented, restated, increased, extended or consolidated from time
to time, the "Note") and shall be repaid in accordance with the terms of this
Agreement and the Note.
2.1.4 Use of Proceeds. Borrower shall use proceeds of the Loan to (i)
pay and discharge any existing loans relating to the Property, (ii) pay all
past-due Basic Carrying Costs, if any, in respect of the Property, (iii) deposit
the Reserve Funds, (iv) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender, (v) fund any working capital
requirements of the Property in accordance with the Loan Documents or (vi)
retain or distribute the balance, if any.
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Section 2.2 Interest Rate.
2.2.1 Applicable Interest Rate. Except as herein provided with respect
to interest accruing at the Default Rate, interest on the principal balance of
the Loan outstanding from time to time shall accrue from the Closing Date up to
and including the Maturity Date (including, without limitation, all interest
that would accrue on the outstanding principal balance of the Loan through the
end of the Interest Period during which the Maturity Date occurs (even if such
period extends beyond the Maturity Date)) at the Applicable Interest Rate.
Interest on the outstanding principal balance of the Loan existing on the
commencement of an Interest Period shall accrue for the entire Interest Period
and shall be owed by Borrower for the entire Interest Period regardless of
whether any principal portion of the Loan is repaid prior to the expiration of
such Interest Period.
2.2.2 Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on a three hundred sixty (360) day year (that is, the
Applicable Interest Rate or the Default Rate, as then applicable, expressed as
an annual rate divided by 360) by (c) the outstanding principal balance.
2.2.3 Determination of Interest Rate.
(a) Any change in the rate of interest hereunder due to a change in
the Applicable Interest Rate shall become effective as of the first day on which
such change in the Applicable Interest Rate shall become effective. Each
determination by Lender of the Applicable Interest Rate shall be conclusive and
binding for all purposes, absent manifest error.
(b) In the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining LIBOR, then
Lender shall, by notice to Borrower ("Lender's Notice"), which notice shall set
forth in reasonable detail such circumstances, establish the Applicable Interest
Rate at a spread (the "Substitute Spread"), taking into account the size and
character of the Loan and the creditworthiness of Borrower, above a published
index used for variable rate loans held by Lender or its investors which were
previously based on LIBOR until Lender was no longer capable of ascertaining
LIBOR (the "Substitute Rate").
(c) If, pursuant to the terms of this Agreement, the Loan has been
converted to a Substitute Rate Loan and Lender shall determine (which
determination shall be conclusive and binding upon Borrower absent manifest
error) that the event(s) or circumstance(s) which resulted in such conversion
shall no longer be applicable, Lender shall give notice thereof to Borrower, and
the Substitute Rate Loan shall automatically convert to a LIBOR Loan on the
effective date set forth in such notice. Notwithstanding any provision of this
Agreement to the contrary, in no event shall Borrower have the right to elect to
convert a LIBOR Loan to a Substitute Rate Loan.
(d) Intentionally Omitted.
(e) If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain a LIBOR
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Loan as contemplated hereunder, (i) the obligation of Lender hereunder to make a
LIBOR Loan shall be converted automatically to a Substitute Rate Loan on the
first (1st) day of the next succeeding Interest Period or within such earlier
period as required by Law and (ii) Lender shall give Borrower a Lender's Notice,
establishing the Applicable Interest Rate at the Substitute Rate plus the
Substitute Spread, in which case the Applicable Interest Rate shall be a rate
equal to the Substitute Rate in effect from time to time plus the Substitute
Spread. In the event the condition necessitating the cancellation of Lender's
obligation to make a LIBOR Loan hereunder shall cease, Lender shall promptly
notify Borrower of such cessation and the Loan shall resume its characteristics
as a LIBOR Loan in accordance with the terms herein from and after the first day
of the Interest Period next following such cessation or such earlier period as
may be required by law. Borrower hereby agrees promptly to pay Lender, upon
demand, any additional amounts necessary to compensate Lender for any
out-of-pocket costs incurred by Lender in making any conversion in accordance
with this Agreement, including, without limitation, any interest or fees payable
by Lender to lenders of funds obtained by it in order to make or maintain the
LIBOR Loan hereunder. Lender's notice of such costs, as certified to Borrower,
shall be set forth in reasonable detail and Lender's calculation shall be
conclusive absent manifest error.
(f) In the event that any change in any requirement of law or in the
interpretation or application thereof, or compliance by Lender with any request
or directive (whether or not having the force of law) hereafter issued from any
central bank or other Governmental Authority:
(i) shall hereafter have the effect of reducing the rate of return on
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by any amount deemed by Lender to be material;
(ii) shall hereafter impose, modify, increase or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds by, any
office of Lender which is not otherwise included in the determination of the
rate hereunder, including the imposition or change of reserve requirements under
Regulation D; or
(iii) shall hereafter impose on Lender any other condition and the
result of any of the foregoing is to increase the cost to Lender of making,
renewing or maintaining loans or extensions of credit or to reduce any amount
receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender, upon demand, any
additional amounts necessary to compensate Lender for such additional cost or
reduced amount receivable which Lender deems to be material as determined by
Lender; provided, however, that Borrower shall not be required under this
Section 2.2.3(f) to pay Lender additional amounts for additional costs or
reduced amounts receivable that are attributable to an increase in taxes imposed
on the Lender. If Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.2.3(f), Borrower shall not be required to pay same
unless they are the result of requirements imposed generally on (or generally
being complied with by) lenders similar to Lender and not the result of some
specific reserve or similar requirement imposed on Lender as a result of
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Lender's special circumstances. If Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.2.3(f), Lender shall provide
Borrower with not less than sixty (60) days notice specifying in reasonable
detail the event by reason of which it has become so entitled and the additional
amount required to fully compensate Lender for such additional cost or reduced
amount. A certificate as to any additional costs or amounts payable pursuant to
the foregoing sentence, executed by an authorized signatory of Lender and
submitted by Lender to Borrower shall be conclusive in the absence of manifest
error. This provision shall survive payment of the Note and the satisfaction of
all other obligations of Borrower under this Agreement and the Loan Documents.
(g) Borrower agrees to indemnify Lender and to hold Lender harmless
from any loss or expense (other than consequential and punitive damages) which
Lender sustains or incurs as a consequence of (i) any default by Borrower in
payment of the principal of or interest on a LIBOR Loan, including, without
limitation, any such loss or expense arising from interest or fees payable by
Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder, (ii) any prepayment (whether voluntary or mandatory) of the LIBOR
Loan on a day that (A) is not a Monthly Payment Date or (B) is a Monthly Payment
Date if Borrower did not give the prior notice of such prepayment required
pursuant to the terms of this Agreement, including, without limitation, such
loss or expense arising from interest or fees payable by Lender to lenders of
funds obtained by it in order to maintain the LIBOR Loan hereunder and (iii) the
conversion (for any reason whatsoever, whether voluntary or involuntary) of the
Applicable Interest Rate to the Substitute Rate plus the Substitute Spread with
respect to any portion of the outstanding principal amount of the Loan then
bearing interest at a rate other than the Substitute Rate plus the Substitute
Spread on a date other than the first day of an Interest Period, including,
without limitation, such loss or expenses arising from interest or fees payable
by Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein
referred to collectively as the "Breakage Costs"). Lender will provide to
Borrower a statement detailing such Breakage Costs and the calculation thereof.
(h) The provisions of this Section 2.2.3 shall survive payment of the
Note in full and the satisfaction of all other obligations of Borrower under
this Agreement and the other Loan Documents.
2.2.4 Usury Savings. (a) This Agreement and the other Loan Documents
are subject to the express condition that at no time shall Borrower be required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If by the terms of this Agreement or the other
Loan Documents, Borrower is at any time required or obligated to pay interest on
the principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the Applicable Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does
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not exceed the Maximum Legal Rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.
(b) Notwithstanding the provisions of Section 11.3 of this Agreement
or the provisions of Section 2.2.4(a) above, to the extent that this Agreement
is interpreted under the laws of the State of Texas with respect to the maximum
amount of interest or fees payable hereunder, the following provisions of this
Section 2.2.4(b) shall apply. The term "interest" shall mean interest as such
term is defined by the applicable usury laws of the State of Texas. Furthermore,
it is hereby agreed that it is the intention of the parties hereto to comply
with the usury laws of the State of Texas; accordingly, notwithstanding any
provisions to the contrary in this Agreement, the other Loan Documents or in any
other documents or instruments securing the payment of the Loan or otherwise
related thereto, in no event shall this Agreement or such documents require the
payment or permit the collection of interest in excess of the maximum amount
permitted by such laws. If when considered independently of this paragraph, any
such excess of interest would be contracted for, charged, reserved or received
under this Agreement, the other Loan Documents or under the terms of any of
other documents or instruments securing payment of the Loan or otherwise
relating thereto, or in the event the maturity of the indebtedness evidenced by
the Note is accelerated in whole or in part, or in the event that all or part of
the principal or interest of the Note shall be pre-paid, so that under any such
circumstances the amount of interest contracted for, charged, reserved or
received pursuant to this Agreement or under any of the instruments securing
payment hereof or otherwise relating hereto, on the amount of principal actually
outstanding from time to time under this Agreement would exceed the maximum
amount of interest permitted by the applicable usury laws of the State of Texas,
then in any such event (i) the provisions of this paragraph shall govern and
control, (ii) neither the Borrower nor any other person or entity now or
hereafter liable for the payment hereof, shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount of
interest permitted by the applicable usury laws of the State of Texas, (iii) any
such excess which may have been collected shall be either applied as a credit
against the then unpaid principal amount hereof or refunded to the Borrower, at
the holder's option, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under the
applicable usury laws of the State of Texas as now or hereafter construed by the
courts having jurisdiction thereof. It is further agreed that without limitation
of the foregoing, all calculations of the rate of interest contracted for,
charged, reserved or received under this Agreement or under such other
documents, which are made for the purpose of determining whether such rate
exceeds such maximum lawful contract rate, shall be made, to the extend
permitted by the laws of the State of Texas, by amortizing, prorating,
allocating, and spreading in equal parts during the period of the full stated
term of the Loan, all interest at any time contracted for, charged, reserved or
received from the undersigned or otherwise by the holder or holders hereof in
connection with the Loan.
Section 2.3 Loan Payments.
2.3.1 Payment Before Maturity Date. On the Monthly Payment Date
occurring in July, 2003 and on each Monthly Payment Date thereafter to and
including the Maturity Date, Borrower shall make a payment to Lender of interest
accruing hereunder during the entire Interest Period (or, with respect to the
Monthly Payment Date occurring in July, 2003, the portion thereof during which
the Loan is outstanding) in which such Monthly Payment Date
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occurs, calculated in the manner set forth herein. Together with each monthly
payment of interest (other than the payment of interest made on the Monthly
Payment Date in July, 2003) , Borrower shall make a payment to Lender of
principal in the amount set forth in the amortization schedule attached hereto
as Schedule VII; provided, however, if Borrower elects to extend the Maturity
Date of the Loan in accordance with the terms hereof and the Debt Service
Coverage Ratio is less than 2.5:1.0 on the Election Date, together with each
monthly payment of interest from and after July 9, 2008 Borrower shall make a
payment to Lender of principal in the amount set forth in the amortization
schedule attached hereto as Schedule IX.
2.3.2 Payment on Maturity Date. (a) Borrower shall pay to Lender on
the Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents, including, without limitation, all
interest that would accrue on the outstanding principal balance of the Loan
through and including the end of the Interest Period in which the Maturity Date
occurs (even if such Interest Period extends beyond the Maturity Date).
(b) Borrower will have one (1) option to extend the Maturity Date of
the Loan for a period of one (1) year. In order to exercise such extension
right, Borrower shall deliver to Lender notice of such extension on or before
the day that is thirty (30) days prior to the Maturity Date (the "Election
Date") and, upon giving of such notice of extension, and subject to the
satisfaction of the conditions set forth below in this Section 2.3.2(b) on or
before the date that is five (5) Business Days prior to the Maturity Date, the
Maturity Date as theretofore in effect will be extended to July 9, 2009. The
Maturity Date shall be extended pursuant to Borrower's notice as aforesaid,
provided that the following conditions are satisfied: (i) no Event of Default
shall be in existence either at the time of Borrower's notice or at the
then-current Maturity Date, (ii) Borrower shall enter into an Interest Rate
Protection Agreement through the term of the applicable extension under the same
terms and conditions of the Interest Rate Protection Agreement (including its
LIBOR strike price) last entered into in connection with the Loan and shall
provide an Assignment of Protection Agreement with respect thereto in the form
of Assignment of Protection Agreement, together with an opinion of counsel with
respect thereto reasonably acceptable to Lender, (iii) Borrower shall pay to
Lender an extension fee in an amount equal to twenty five hundredths of one
percent (0.25%) of the then outstanding principal amount of the Loan and (iv) if
the Debt Service Coverage Ratio for the Property shall be less than 2.5:1.0 on
the Election Date, Borrower shall have confirmed its understanding that instead
of making a payment to Lender of principal in the amount set forth in the
amortization schedule attached hereto as Schedule VII together with each monthly
payment of interest, Borrower shall make a payment to Lender of principal in the
amount set forth in the amortization schedule attached hereto as Schedule IX
together with each monthly payment of interest from and after July 9, 2008.
2.3.3 Interest Rate and Payment after Default. In the event that, and
for so long as, any Event of Default shall have occurred and be continuing, the
outstanding principal balance of the Loan shall accrue interest at the Default
Rate, calculated from the date the Event of Default occurred. If all or any part
of the principal amount of the Loan is prepaid upon acceleration of the Loan
following the occurrence of an Event of Default prior to the Permitted
Prepayment Date, Borrower shall be required to pay Lender, in addition to all
other amounts then payable hereunder (including, without limitation, (i) in the
event that such prepayment is
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received on a Monthly Payment Date, interest accruing on such amount calculated
through and including the end of the Interest Period in which such Monthly
Payment Date occurs, or (ii) in the event that such prepayment is received on a
date other than a Monthly Payment Date, interest accruing on such amount
calculated through and including the end of the Interest Period in which the
next Monthly Payment Date occurs), a prepayment fee equal to three percent
(3.00%) of the amount of principal being repaid together with a Spread
Maintenance Premium calculated with respect to the amount of principal being
repaid and Breakage Costs.
2.3.4 Late Payment Charge. If any principal, interest or any other sum
due under the Loan Documents, other than the payment of principal due on the
Maturity Date, is not paid by Borrower on the date on which it is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of three and one
half percent (3.5%) of such unpaid sum or the maximum amount permitted by
applicable law in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment. Any such amount shall be secured by the Mortgage
and the other Loan Documents.
2.3.5 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M. (with respect to
scheduled payments hereunder) or 3:00 P.M. (with respect to unscheduled payments
hereunder), New York City time, as applicable, on the date when due and shall be
made in lawful money of the United States of America in immediately available
funds at Lender's office, and any funds received by Lender after such time
shall, for all purposes hereof, be deemed to have been paid on the next
succeeding Business Day.
(b) Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be the Business Day immediately preceding such day.
(c) All payments required to be made by Borrower hereunder or under
the Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective
of any defense thereto.
Section 2.4 Prepayments.
2.4.1 Voluntary Prepayments. Except as otherwise provided herein,
Borrower shall not have the right to prepay the Loan in whole or in part. On and
after the Permitted Prepayment Date, Borrower may, provided no Event of Default
has occurred, at its option, prepay the Debt (x) in whole, (y) in part in an
amount up to Five Million and No/100 Dollars ($5,000,000.00) per Loan Year
and/or (z) pursuant to Section 11.28 hereof, provided, in each case, the
following conditions are satisfied:
(a) Borrower shall provide prior notice to Lender specifying the date
upon which the prepayment is to be made (the "Prepayment Date"), which notice
shall be delivered to Lender not less five (5) Business Days prior to such
Prepayment Date (or such shorter period of time as may be permitted by Lender in
its sole discretion) and which notice shall be irrevocable;
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(b) Borrower shall pay to Lender simultaneously with such prepayment
the Prepayment Fee, if any (except in connection with a release pursuant to
Section 11.28 hereof);
(c) Intentionally Omitted;
(d) if such prepayment is made on a Monthly Payment Date, then in
connection with such prepayment Borrower shall pay to Lender, simultaneously
with such prepayment, all interest on the principal balance of the Note then
being prepaid which would have accrued through the end of the Interest Period
then in effect notwithstanding that such Interest Period extends beyond the
Prepayment Date; and
(e) if such prepayment is made on a day other than a Monthly Payment
Date, then in connection with such prepayment Borrower shall pay to Lender,
simultaneously with such prepayment, all interest on the principal balance of
this Note then being prepaid which would have accrued through the end of the
Interest Period then in effect notwithstanding that such Interest Period extends
beyond the Prepayment Date; provided, however, that if the Prepayment Date is a
date on or after the first (1st) day following a Monthly Payment Date in such
calendar month and prior to the first day of the Interest Period that commences
in such calendar month, Borrower shall also pay to Lender in connection with
such prepayment all interest on the principal balance of this Note then being
prepaid which would have accrued through the end of the next succeeding Interest
Period (the "Additional Interest") at the Applicable Interest Rate. In the event
that such prepayment occurs prior to the applicable Determination Date it may be
impossible for Borrower and Lender to calculate with certainty the interest that
would have accrued at the Applicable Interest Rate on the amount then prepaid
through the end of the Interest Period following the Interest Period in which
such prepayment occurs. Accordingly, in the event that all or any portion of the
Debt is prepaid in whole prior to the Determination Date applicable to the
Interest Period following the Interest Period in which such prepayment occurs,
the interest that would have accrued at the Applicable Interest Rate on the
amount then prepaid through the end of the Interest Period following the
Interest Period in which such prepayment occurs shall be calculated based on an
interest rate (the "Assumed Note Rate") equal to the sum of (i) the greater of
(A) the Applicable Interest Rate as determined on the preceding Determination
Date or (B) the Applicable Interest Rate as it would have been determined two
(2) Business Days prior to the immediately preceding Monthly Payment Date, plus
(ii) 1.00%. Thereafter, on the Determination Date applicable to the Interest
Period following the Interest Period in which such prepayment occurs, Lender
shall determine the Applicable Interest Rate as if such prepayment had not
occurred. If it is determined by Lender that the Applicable Interest Rate for
the Interest Period following the Interest Period in which such prepayment
occurs is less than the Assumed Note Rate, Lender shall promptly refund to
Borrower, without interest, an amount equal to the difference between the
interest paid by Borrower for the Interest Period following the Interest Period
in which such prepayment occurs calculated at the Assumed Note Rate and the
amount of interest for said Interest Period calculated at the actual Applicable
Interest Rate. Alternatively, in the event that it is determined that the actual
Applicable Interest Rate for the Interest Period following the Interest Period
in which such prepayment occurs is greater than the Assumed Note Rate, Borrower
shall promptly pay to Lender, without additional interest or other late charges
or penalties (and in no event later than the next following Monthly Payment
Date) an amount equal to the difference between the interest paid by Borrower
for the Interest Period following the Interest Period in which such
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prepayment occurs on the prepaid amount calculated at the Assumed Note Rate and
the amount of interest for said Interest Period calculated at the actual
Applicable Interest Rate. Notwithstanding the foregoing provisions of this
Section 2.4.1(e), if any prepayment is received by Lender on a date which is
after a Monthly Payment Date but prior to the Determination Date for the
Interest Period following such Monthly Payment Date, Borrower shall not be
required to pay the Additional Interest if Lender and Servicer determine in
their sole discretion that Lender has received such prepayment on a date such
that arrangements can be made to pay the holder(s) of all Securities on or
before the next succeeding distribution date in any Securitization of the Loan.
Except to the extent that Borrower is not required to pay Additional Interest as
described in the preceding sentence, any prepayment received by Lender on a date
other than a Monthly Payment Date shall be held by Lender as collateral security
for the Loan and shall be applied to the Debt on the next Monthly Payment Date.
2.4.2 Mandatory Prepayments. On each date on which Lender actually
receives a distribution of Net Proceeds, and if Lender is not required to make
such Net Proceeds available to Borrower for a Restoration or otherwise remit
such Net Proceeds to Borrower pursuant to Section 5.3.2(g), Borrower shall
prepay, without the imposition of any Prepayment Fee or other charge except as
expressly set forth in this Section 2.4.2, the outstanding principal balance of
the Note in an amount equal to one hundred percent (100%) of such Net Proceeds
together with (i) in the event that such Net Proceeds are received on or before
a Monthly Payment Date, interest accruing on such amount calculated through and
including the end of the Interest Period in which such Monthly Payment Date
occurs, or (ii) in the event that such Net Proceeds are received on a date after
a Monthly Payment Date, interest accruing on such amount calculated through and
including the end of Interest Period in which the next Monthly Payment Date
occurs (it being agreed that if the date of such prepayment is on a date after
the Monthly Payment Date falling in such Interest Period but prior to the
Determination Date applicable to the Interest Period in which the next Monthly
Payment Date will occur Lender shall estimate in good faith the Applicable
Interest Rate ("Lender's Estimate") for the Interest Period in which the next
Monthly Payment Date will occur and, to the extent the amount of interest paid
by Borrower based on Lender's Estimate exceeds the amount of interest which
shall become payable at the Applicable Interest Rate as determined on the
Determination Date next following Lender shall return such excess to Borrower on
the Business Day following such Determination Date and, to the extent the amount
of interest which shall become payable at the Applicable Interest Rate as
determined on the Determination Date next following exceeds the amount of
interest paid by Borrower based on Lender's Estimate Borrower shall pay such
excess to Lender on the Business Day following such Determination Date). Any
prepayment received by Lender pursuant to this Section 2.4.2 on a date other
than a Monthly Payment Date shall be held by Lender as collateral security for
the Loan in an interest bearing account, with such interest accruing to the
benefit of Borrower, and shall be applied by Lender on the next Monthly Payment
Date. The Allocated Loan Amount with respect to the applicable Individual
Property in connection with which such Net Proceeds are so applied pursuant to
this Section 2.4.2 shall be reduced in an amount equal to such prepayment of
principal. Except as set forth in the next succeeding sentence, any prepayment
made pursuant to this Section 2.4.2 shall not be included in any calculation
pursuant to Section 11.28(e). Notwithstanding the foregoing, if in connection
with any Casualty or Condemnation at any Individual Property Lender is not
required to make the Net Proceeds available to Borrower for a Restoration or
otherwise remit such Net Proceeds to Borrower pursuant to Section 5.3.2(g), at
Borrower's option, Lender shall release the applicable
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Individual Property from the lien of the Mortgage and related Loan Documents
provided that (i) Borrower shall pay Lender an amount which, when added to the
amount of Net Proceeds received in connection with such Casualty or
Condemnation, equals the Allocated Loan Amount of the Individual Property for
which the Net Proceeds were obtained together with interest on such amount
calculated for the same periods as Net Proceeds in the first sentence of this
Section 2.4.2, (ii) no Event of Default shall have occurred and be continuing,
(iii) Borrower shall provide to Lender a partial release of the Mortgage as it
relates to such Individual Property and related Loan Documents in a form
appropriate for the jurisdiction in which the applicable Individual Property is
located and reasonably satisfactory to Lender for execution by Lender, (iv)
simultaneously with the release, Borrower shall convey fee simple title to the
Release Property to a Person other than Borrower and Borrower and Operating
Company shall execute (A) an amendment to the Operating Lease effective as of
the date of such release deleting such Individual Property from the list of
Individual Properties (as defined in the Operating Lease) on Schedule 1 to the
Operating Lease and (B) an amendment to the Management Agreement effective as of
the date of such release deleting such Individual Property from the list of
Facilities (as defined in the Management Agreement), (v) Borrower shall deliver
to Lender an opinion of counsel for Borrower that is standard in commercial
lending transactions and subject only to customary qualifications, assumptions
and exceptions opining, among other things, that if a Securitization of any
portion of the Loan has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code as a result
of the partial release pursuant to this Section 2.4.2, (vi) Borrower shall
provide to Lender such opinions and other documentation as Lender reasonably
requires (provided the delivery of such opinions and documentation is customary
in the relevant jurisdiction) to be delivered by Borrower in connection with
such release, (vii) Borrower shall pay to Lender the Prepayment Fee based on the
amount being prepaid in excess of the Net Proceeds which are being applied to
principal (such excess amount, the "Casualty Release Amount") (it being agreed
that if such release occurs prior to the Permitted Prepayment Date, the
Prepayment Fee shall be deemed to be three percent (3.00%) of the amount being
prepaid), if any and (viii) the Casualty Release Amount of such Individual
Property, when taken together with the Release Amount of each other Individual
Property released from the Lien of the Mortgage pursuant to Section 11.28 and
the Casualty Release Amount of each other Individual Property released from the
Lien of the Mortgage pursuant to this Section 2.4.2 in the same Loan Year shall
not exceed Fifteen Million and No/100 Dollars ($15,000,000.00).
2.4.3 Prepayments After Default. If after an Event of Default, payment
of all or any part of the principal of the Loan is tendered by Borrower, a
purchaser at foreclosure or any other Person, such tender shall be deemed an
attempt to circumvent the prohibition against prepayment set forth in Section
2.4.1 and Borrower, such purchaser at foreclosure or other Person shall pay, in
addition to the outstanding principal balance, the Spread Maintenance Premium
(if such prepayment occurs prior to the Permitted Prepayment Date) and all
accrued and unpaid interest (including, without limitation, (a) in the event
that such prepayment is received on or before a Monthly Payment Date, interest
accruing on such amount calculated through and including the end of the Interest
Period in which such Monthly Payment Date occurs, or (b) in the event that such
prepayment is received on a date after a Monthly Payment Date, interest accruing
on such amount calculated through and including the end of Interest Period in
which the next Monthly Payment Date occurs), a prepayment fee equal to three
percent
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(3.00%) of the amount of principal being repaid, Breakage Costs and other
amounts payable under the Loan Documents.
Section 2.5 Taxes.
(a) Any and all payments by the Borrower under or in respect of this
Agreement or any other Loan Document to which the Borrower is a party shall be
made free and clear of, and without deduction or withholding for or on account
of, any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto, whether now or hereafter imposed, levied,
collected, withheld or assessed by any taxation authority or other Governmental
Authority (collectively, "Section 2.5 Taxes"), unless required by law. If the
Borrower shall be required under any applicable Legal Requirements to deduct or
withhold any Section 2.5 Taxes from or in respect of any sum payable under or in
respect of this Agreement or any of the other Loan Documents to the Lender or
the Agent, (i) the Borrower shall make all such deductions and withholdings in
respect of Section 2.5 Taxes, (ii) the Borrower shall pay the full amount
deducted or withheld in respect of Section 2.5 Taxes to the relevant taxation
authority or other Governmental Authority in accordance with the applicable
Legal Requirements, and (iii) in the case of Non-Excluded Taxes (as defined
below and modified throughout this Section 2.5), the sum payable by the Borrower
shall be increased as may be necessary so that after the Borrower and the Agent
have made all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section 2.5) such
Lender or such Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made in respect
of Non-Excluded Taxes. For purposes of this Agreement "Non-Excluded Taxes" are
Section 2.5 Taxes other than, in the case of each Lender, Section 2.5 Taxes that
are imposed on its net income (including franchise taxes imposed in lieu
thereof) and branch profits taxes imposed as a result of any present or former
connection between the Lender and the relevant taxing authority, unless such
Section 2.5 Taxes are imposed solely as a result of such Lender or such Agent
having executed, delivered or performed its obligations or received payments
under, or enforced, this Agreement or any of the other Loan Documents (in which
case such Section 2.5 Taxes will be treated as Non-Excluded Taxes).
(b) In addition, the Borrower hereby agrees to pay any present or
future stamp, recording, documentary, excise, property or similar taxes, charges
or levies that arise from any payment made under or in respect of this Agreement
or any other Loan Document or from the execution, delivery or registration of,
any performance under, or otherwise with respect to, this Agreement, the Notes
or any other Loan Document (collectively, "Other Taxes").
(c) The Borrower hereby agrees to indemnify each Lender and the Agent
for, and to hold each of them harmless against, the full amount of Non-Excluded
Taxes and Other Taxes, and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. The indemnity
by the Borrower provided for in this Section 2.5(c) shall apply and be made
whether or not the Non-Excluded Taxes or Other Taxes for which indemnification
hereunder is sought have been correctly or legally asserted. Amounts payable by
the Borrower under the indemnity set forth in this Section 2.5(c) shall be paid
within 10 days from the date on which the applicable Lender or the Agent, as the
case may be, makes written demand therefor.
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(d) The Lender and the Agent pursuant to Section 2.5(a) shall take all
reasonable actions that are consistent with legal and regulatory restrictions
requested by the Borrower to assist the Borrower, as the case may be, at the
sole expense of the Borrower, to recover from the relevant taxation authority or
other Governmental Authority any taxes in respect of which amounts were paid by
the Borrower pursuant to Sections 2.5(a), (b) or (c). However, the Lender and
Agent will not be required to take any action that would be, in the sole good
faith judgment of the Lender and Agent, legally inadvisable, or commercially or
otherwise disadvantageous to the Lender or Agent in any respect. Furthermore, if
any Lender shall become aware that it is entitled to receive a refund in respect
of amounts paid by the Borrower pursuant to this Section 2.5, which refund in
the sole good faith judgment of such Lender or Agent is allocable to such
payment, it shall promptly notify the Borrower of the availability of such
refund and shall, within 60 days after the receipt of a request by the Borrower,
take all reasonable actions that are consistent with legal and regulatory
restrictions to apply for and obtain such refund, provided that in no event
shall Lender be required to disclose any information that, in the sole good
faith judgment of Lender, would be confidential or commercially or otherwise
disadvantageous to the Lender or Agent in any respect (including, without
limitation, any tax return). If the Lender obtains a credit or receives a refund
or reduction (whether by way of direct payment or by offset) of any Taxes paid
by the Borrower pursuant to this Section 2.5 or with respect to which such
Borrower has paid additional amounts pursuant to this Section 2.5, which credit,
refund or reduction in the sole good faith judgment of Lender is allocable to
such payment, it shall promptly notify the Borrower of such refund and shall,
within 15 days after receipt, pay over such credit, refund or reduction to the
Borrower (including any interest paid by the relevant Governmental Authority
with respect to such credit, refund or reduction).
(e) Within 30 days after the date of any payment of Section 2.5 Taxes,
the Borrower (or any Person making such payment on behalf of the Borrower) shall
furnish to the Agent for its own account or for the account of the applicable
Lender or the Agent, as the case may be, a certified copy of the original
official receipt evidencing payment thereof.
(f) Each Lender (including for avoidance of doubt any participant,
assignee or successor) that either (i) is not incorporated under the laws of the
United States, any State thereof, or the District of Columbia or (ii) whose name
does not include "Incorporated," "Inc.," "Corporation," "Corp.," "P.C.,"
"insurance company," or "assurance company" (a "Non-U.S. Corporate Lender")
shall deliver or caused to be delivered to the Borrower, on or before the date
such Lender becomes a party to this Agreement or upon obsolescence or invalidity
of any form previously delivered by such Lender, the following properly
completed and duly executed documents:
(1) a complete and executed (x) U.S. Internal Revenue Form W-8BEN
with Part II completed in which the Lender or Agent claims the
benefits of a tax treaty with the United States providing for a
reduced or zero rate of withholding (or any successor forms thereto),
including all appropriate attachments or (y) a U.S. Internal Revenue
Service Form W-8ECI (or any successor form thereto); or
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(2) in the case of an individual, (x) a complete and executed
U.S. Internal Revenue Service Form W-8BEN and a certificate
substantially in the form of Schedule XV (a "Section 2.5 Certificate")
(or any successor forms thereto) claiming a zero rate of withholding
or (y) a complete and executed Internal Revenue Service Form W-9 (or
any successor forms thereto); or
(3) in the case of a Non-U.S. Corporate Lender that is organized
under the laws of the United States, any State thereof, or the
District of Columbia, (x) a complete and executed Internal Revenue
Service Form W-9 (or any successor thereto), including all appropriate
attachments or (y) if such Non-U.S. Corporate Lender is disregarded
for federal income tax purposes, the documents that would be required
by clause (1), (2), (3), (4) or (5) with respect to its beneficial
owner if such beneficial owner were the Lender or Agent; or
(4) in the case of a Non-U.S. Corporate Lender that (i) is not
organized under the laws of the United States, any State thereof, or
the District of Columbia and (ii) is treated as a corporation for U.S.
federal income tax purposes, a complete and executed U.S. Internal
Revenue Service Form W-8BEN claiming a zero rate of withholding (or
any successor forms thereto) and a Section 2.5 Certificate; or
(5) in the case of a Non-U.S. Corporate Lender that (A) is
treated as a partnership or other non-corporate entity, or is
disregarded for U.S. federal income tax purposes and (B) is not
organized under the laws of the United States, any State thereof, or
the District of Columbia, a (x) a complete and executed Internal
Revenue Service Form W-8IMY (including all required documents and
attachments) and (y)(i) a Section 2.5 Certificate, and (ii) without
duplication, with respect to each of its beneficial owners and the
beneficial owners of such beneficial owners looking through chains of
owners to individuals or entities that are treated as corporations for
U.S. federal income tax purposes (all such owners, "beneficial
owners"), the documents that would be required by clause (1), (2),
(3), (4) or this clause (5) with respect to each such beneficial owner
if such beneficial owner were the Lender or Agent, provided, however,
that no such documents will be required with respect to a beneficial
owner to the extent the actual Lender or Agent is determined to be in
compliance with the requirements for certification on behalf of its
beneficial owner as may be provided in applicable U.S. Treasury
regulations, or the requirements of this clause (5) are otherwise
determined to be unnecessary, all such determinations under this
clause (5) to be made in the sole discretion of the Borrower.
If at the time a Lender first becomes a party to this Agreement, such
Lender is subject to United States withholding tax on payments made under this
Agreement, such Section 2.5 Taxes shall be treated as any Section 2.5 Taxes
other than Non-Excluded Taxes and shall not
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qualify as Non-Excluded Taxes ("Excluded Taxes"). If Lender subsequently
provides an appropriate form certifying that a lesser rate applies, withholding
tax at such lesser rate shall be considered Excluded Taxes solely for the
periods governed by such form. However, if, on the date of the Assignment and
Acceptance pursuant to which a Lender assignee becomes a party to this
Agreement, the Lender assignor was entitled to payments under subsection (a) of
this Section 2.5, then, to such extent (and only to such extent), the term
"Non-Excluded Taxes" shall include the Non-Excluded Taxes with respect to the
Lender assignor as of the date of the Assignment and Acceptance, as well as any
Section 2.5 Taxes that may be imposed in the future that qualify as Non-Excluded
Taxes with respect to the Lender assignee. Any additional Section 2.5 Taxes in
respect of a Lender that result solely as a result of a change in circumstances
relating to the Lender (including a change in the applicable lending office of
the Lender or a change in the Lender's ownership of the Borrower, but not
including a change in Borrower's ownership of the Lender) shall be treated as
Excluded Taxes (and shall not qualify as Non-Excluded Taxes) unless (A) any such
additional Section 2.5 Taxes are imposed as a result of a change in the
applicable Legal Requirements, or in the interpretation or application thereof,
occurring after the date of such change in circumstances or (B) such change is
made as a result of a request by the Borrower. For avoidance of doubt, if a
change in circumstances occurs after a change in the applicable Legal
Requirements and no additional Section 2.5 Taxes would have resulted if the
change in circumstances had not occurred, then such Section 2.5 Taxes shall be
treated as Excluded Taxes unless such change is made as a result of a request by
the Borrower.
(g) For any period with respect to which any Lender has failed to
provide the Borrower with the appropriate form, certificate or other document
described in subsection (f) of this Section 2.5 (other than if such form,
certificate or other document otherwise is not required under subsection (f) of
this Section 2.5) such Lender shall not be entitled to payment or
indemnification under subsection (a) or (c) of this Section 2.5 with respect to
otherwise Non-Excluded Taxes imposed by the United States by reason of such
failure and such Taxes shall be considered Excluded Taxes and shall not qualify
as Non-Excluded Taxes; provided, however, that should a Lender become subject to
Non-Excluded Taxes because of its failure to deliver a form, certificate or
other document required hereunder, the Borrower shall, at Lender's expense, take
such steps as such Lender shall reasonably request to assist such Lender in
recovering such Non-Excluded Taxes.
(h) Each Lender hereby agrees that, upon the occurrence of any
circumstances entitling such Lender to additional amounts pursuant to this
Section 2.5, such Lender shall use reasonable efforts that are consistent with
legal and regulatory restrictions, at the sole expense of the Borrower, to
designate a different applicable lending office if the making of such a change
would avoid the need for, or materially reduce the amount of, any such
additional amounts that may thereafter accrue and would not be, in the sole good
faith judgment of such Lender, legally inadvisable or commercially or otherwise
disadvantageous to such Lender in any respect.
III. REPRESENTATIONS AND WARRANTIES
Section 3.1 Borrower Representations.
Borrower represents and warrants as of the date hereof that:
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3.1.1 Organization. (a) Borrower is duly organized, validly existing
and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on its ability to perform its obligations hereunder, and
Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents by it, and has the
power and authority to execute, deliver and perform under this Agreement, the
other Loan Documents and all the transactions contemplated hereby.
(b) Borrower's exact legal name is correctly set forth in the first
paragraph of this Agreement. Borrower is an organization of the type specified
in the first paragraph of this Agreement. Borrower is incorporated or organized
under the laws of the state specified in the first paragraph of this Agreement.
Borrower's principal place of business and chief executive office, and the place
where Borrower keeps its books and records, including recorded data of any kind
or nature, regardless of the medium of recording, including software, writings,
plans, specifications and schematics, has been for the preceding four (4) months
(or, if less than four (4) months, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth in the first
paragraph of this Agreement (unless Borrower notifies Lender at least thirty
(30) days prior to the date of such change). Borrower's organizational
identification number, if any, assigned by the state of its incorporation or
organization is 3644952. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. Borrower is not subject to back-up withholding taxes.
3.1.2 Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and constitute a legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.1.3 No Conflicts. The execution and delivery of this Agreement and
the other Loan Documents by Borrower and the performance of its obligations
hereunder and thereunder will not conflict with any provision of any law or
regulation to which Borrower is subject, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any of Borrower's organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree
applicable to Borrower, or result in the creation or imposition of any lien on
any of Borrower's assets or property (other than pursuant to the Loan
Documents).
3.1.4 Litigation. There is no action, suit, proceeding or
investigation pending or, to Borrower's knowledge, threatened against Borrower
in any court or by or before any other Governmental Authority which would
materially and adversely affect the ability of Borrower to carry out the
transactions contemplated by this Agreement.
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3.1.5 Agreements. Borrower is not in default with respect to any order
or decree of any court or any order, regulation or demand of any Governmental
Authority, which default would reasonably be expected to have consequences that
would materially and adversely affect the condition (financial or other) or
operations of Borrower or its properties or would reasonably be expected to
materially and adversely affect its performance hereunder.
3.1.6 Consents. No consent, approval, authorization or order of any
court or Governmental Authority is required for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, this Agreement or
the consummation of the transactions contemplated hereby, other than those which
have been obtained by Borrower.
3.1.7 Title. Borrower has good, marketable and insurable fee simple
title to the real property comprising part of each Individual Property and good
title to the balance of the Property owned by it, free and clear of all Liens
whatsoever except the Permitted Encumbrances. The Mortgage, when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(i) a valid, first priority, perfected lien on each Individual Property, subject
only to Permitted Encumbrances and (ii) perfected security interests in and to,
and perfected collateral assignments of, all personalty (including the Leases),
all in accordance with the terms thereof, in each case subject only to any
Permitted Encumbrances. Except as set forth on Schedule VI hereto and insured
over by the title company issuing the Title Insurance Policy for each Individual
Property, there are no mechanics', materialman's or other similar liens or
claims which have been filed for work, labor or materials affecting any
Individual Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage. None of the Permitted Encumbrances, individually
or in the aggregate, materially interfere with the benefits of the security
intended to be provided by the Mortgage and this Loan Agreement, materially and
adversely affect the value of any Individual Property, impair the current use or
operations of any Individual Property or impair Borrower's ability to pay its
obligations in a timely manner.
3.1.8 No Plan Assets. As of the date hereof and throughout the term of
the Loan (a) Borrower is not and will not be an "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") subject to Title I of ERISA, (b) none of the assets of
Borrower constitutes or will constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section 2510.3-101, (c) Borrower is not and will
not be a "governmental plan" within the meaning of Section 3(32) of ERISA, and
Borrower is not and will not be subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans, as
if it were a governmental plan or as if its assets were assets of a governmental
plan.
3.1.9 Compliance. Borrower, Operating Company and each Individual
Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes and Prescribed Laws. Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which would reasonably be expected to materially
adversely affect the condition (financial or otherwise) or business of Borrower.
Borrower has not committed any act which may give any Governmental Authority the
right to cause Borrower to forfeit any Individual Property or any part thereof
or any monies paid in
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performance of Borrower's obligations under any of the Loan Documents.3.1.10
Financial Information. All financial data, including, without limitation, the
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of the Property (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Property as of the date of such reports, and (iii) have been
prepared in accordance with GAAP throughout the periods covered, except as
disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on any Individual
Property or the operation thereof, except as referred to or reflected in said
financial statements. Since the date of the financial statements, there has been
no material adverse change in the financial condition, operations or business of
Borrower or any Individual Property from that set forth in said financial
statements.
3.1.11 Condemnation. No Condemnation or other proceeding has been
commenced or, to Borrower's actual knowledge, is contemplated with respect to
all or any portion of any Individual Property or for the relocation of roadways
providing access to such Individual Property which Condemnation or other
proceeding is reasonably expected to have a material adverse effect on the
operation or current use of such Individual Property.
3.1.12 Intentionally Omitted.
3.1.13 Separate Lots. The Property is comprised of one (1) or more
parcels which constitute separate tax lots and do not constitute a portion of
any other tax lot not a part of the Property.
3.1.14 Assessments. To the actual knowledge of Borrower (a) there are
no pending or proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor (b) are there any contemplated
improvements to any Individual Property that may result in such special or other
assessments which assessments are reasonably expected to have a material adverse
effect on the operation or current use of such Individual Property.
3.1.15 Enforceability. The Loan Documents are not subject to any right
of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
3.1.16 Assignment of Leases. The Assignment of Leases creates a valid
assignment of, or a valid security interest in, certain rights under the Leases,
subject only to a license granted to Borrower to exercise certain rights and to
perform certain obligations of the lessor under the Leases, including the right
to operate the Property. No Person other than Lender has any interest in or
assignment of the Leases or any portion of the Rents due and payable or to
become due and payable thereunder.
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3.1.17 Insurance. Borrower has obtained and has delivered to Lender
certificates of insurance relating to all of the Policies, with evidence that
all premiums have been prepaid thereunder, reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. Except as set forth
on Schedule X hereto, no written claims in excess of $500,000.00 have been made
under any of the Policies, and no Person, including Borrower, has done, by act
or omission, anything which would impair the coverage of any of the Policies.
3.1.18 Licenses. All permits and approvals, including without
limitation, certificates of occupancy required by any Governmental Authority for
the use, occupancy and operation of each Individual Property in the manner in
which such Individual Property is currently being used, occupied and operated
have been obtained and are in full force and effect unless the failure of
Borrower to obtain any of the foregoing would not result in a material adverse
effect upon (a) the business operations, economic performance, assets or
condition (financial or otherwise) of Borrower, Guarantor or the Individual
Property for which Borrower failed to obtain such permit or approval, (b) the
ability of Borrower to perform, in all respects, its obligations under each of
the Loan Documents, or (c) the enforceability or validity of any Loan Document
or the perfection or priority of any Lien created under any Loan Document.
3.1.19 Intentionally Omitted.
3.1.20 Physical Condition. Except for the Required Repairs, each
Individual Property, including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in any
Individual Property, and Borrower has not received notice from any insurance
company or bonding company of any defects or inadequacies in any Individual
Property, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.
3.1.21 Boundaries. Except as disclosed on the Surveys, all of the
improvements which were included in determining the appraised value of each
Individual Property lie wholly within the boundaries of such Individual
Property, and no improvements on adjoining properties encroach upon any
Individual Property, and no easements or other encumbrances affecting any
Individual Property encroach upon any of the improvements, so as to materially
and adversely affect the value or marketability of such Individual Property
except those which are insured against by title insurance.
3.1.22 Leases. Borrower represents and warrants to Lender with respect
to the Leases that: (a) the Property is not subject to any Leases other than the
Operating Lease except for those leases described on Schedule IV hereof, (b) the
Operating Lease is in full force and effect and there are no defaults thereunder
by either party, (c) the copy of the Operating Lease delivered to Lender is true
and complete, and there are no oral agreements with respect thereto, (d) no Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date and (e) all work to be performed by Borrower under each Lease
has been performed as required and has been accepted by the applicable Tenant.
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3.1.23 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of each
Individual Property to Borrower have been paid or are being paid simultaneously
herewith. All mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid under applicable Legal Requirements in connection with
the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid or are being paid simultaneously herewith. All taxes
and governmental assessments due and owing in respect of each Individual
Property have been paid, or an escrow of funds in an amount sufficient to cover
such payments has been established hereunder pursuant to Section 6.2.1 or are
insured against by the title insurance policy to be issued in connection with
the Mortgage.
3.1.24 Single Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that as of the date hereof and until such time as the
Debt shall be paid in full:
(a) Borrower does not own and will not own any asset or property other
than (i) the Property, and (ii) incidental personal property necessary for the
ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership,
leasing, management and operation of the Property and Borrower will conduct and
operate its business as presently conducted and operated.
(c) Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any
constituent party, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an arms-length
basis with third parties other than any such party.
(d) Borrower has not incurred and will not incur any Indebtedness
other than (i) the Debt, (ii) unsecured trade payables and operational debt not
evidenced by a note and (iii) Indebtedness incurred in the financing of
equipment and other personal property used on the Property; provided that any
Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not
more than sixty (60) days past due subject to Borrower's right to contest same
pursuant to Section 4.1.2 hereof, (y) not in excess of Ten Million and No/100
Dollars ($10,000,000.00) in the aggregate and (z) incurred in the ordinary
course of business. No Indebtedness other than the Debt may be secured
(subordinate or pari passu) by the Property.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party), and shall not
acquire obligations or securities of its Affiliates.
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(f) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due.
(g) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will not, nor will Borrower permit any constituent party to amend,
modify or otherwise change the partnership certificate, partnership agreement,
articles of incorporation and bylaws, operating agreement, trust or other
organizational documents of Borrower or such constituent party without the prior
consent of Lender in any manner that (i) violates the single purpose covenants
set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes
any provision thereof that by its terms cannot be modified at any time when the
Loan is outstanding or by its terms cannot be modified without Lender's consent.
(h) Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates and any
constituent party. Borrower's assets will not be listed as assets on the
financial statement of any other Person, provided, however, that Borrower's
assets may be included in a consolidated financial statement of its Affiliates
provided that (i) appropriate notation shall be made in the footnotes to such
consolidated financial statements to indicate the separateness of Borrower and
such Affiliates and to indicate that Borrower's assets and credit are not
available to satisfy the debts and other obligations of such Affiliates or any
other Person and (ii) such assets shall be listed on Borrower's own separate
balance sheet although Borrower shall not be required to disclose with
specificity Borrower's assets separately on the consolidated financial
statements. Borrower will file its own tax returns (to the extent Borrower is
required to file any such tax returns).
(i) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate of Borrower or any constituent party of Borrower), shall correct
any known misunderstanding regarding its status as a separate entity, shall
conduct business in its own name, shall not identify itself or any of its
Affiliates as a division or part of the other.
(j) Borrower will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations.
(k) Neither Borrower nor any constituent party will seek or effect the
liquidation, dissolution, winding up, liquidation, consolidation or merger, in
whole or in part, of Borrower.
(l) Borrower will not commingle the funds and other assets of Borrower
with those of any Affiliate or constituent party or any other Person, and will
hold all of its assets in its own name.
(m) Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any other
Person.
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(n) Borrower will not guarantee or become obligated for the debts of
any other Person and does not and will not hold itself out to be responsible for
or have its credit available to satisfy the debts or obligations of any other
Person.
(o) Borrower shall at all times during the term of the Loan be a
single member Delaware limited liability company. Borrower shall have at least
two springing members, one of which, upon the dissolution of such sole member or
the withdrawal or the disassociation of the sole member from Borrower, shall
immediately become the sole member of Borrower, and the other of which shall
become the sole member of Borrower if the first such springing member no longer
is available to serve as such sole member.
(p) Borrower shall at all times cause there to be at least two duly
appointed members of its board of directors who are provided by a
nationally-recognized company that provides professional independent directors
(each, an "Independent Director") of Borrower reasonably satisfactory to Lender
who shall not have been at the time of such individual's appointment or at any
time while serving as an Independent Director on the board of directors of
Borrower, and may not have been at any time during the preceding five years (i)
an equity holder, director (other than as an Independent Director), officer,
employee, partner, attorney or counsel of Borrower or any Affiliate of Borrower,
(ii) a customer, supplier or other Person who derives any of its purchases or
revenues from its activities with Borrower or any Affiliate of Borrower, (iii) a
Person or other entity controlling or under common control with any such
stockholder, partner, customer, supplier or other Person, or (iv) a member of
the immediate family of any such equity holder, director, officer, employee,
partner, customer, supplier or other Person. A natural person who satisfies the
foregoing definition other than subsection (ii) shall not be disqualified from
serving as an Independent Director if such individual is an independent manager
provided by a nationally-recognized company that provides professional
independent managers, directors or special members and that also provides other
corporate services in the ordinary course of its business. A natural person who
otherwise satisfies the foregoing definition of Independent Director except for
being the independent director, manager or special member of a "special purpose
entity" affiliated with the Borrower that does not own a direct or indirect
equity interest in the Borrower shall not be disqualified from serving as an
Independent Director if such individual is at the time of initial appointment,
or at any time while serving as an Independent Director, an Independent Director
of a "special purpose entity" affiliated with the Borrower (other than any
entity that owns a direct or indirect equity interest in the Borrower) if such
individual is an independent manager, director or special member provided by a
nationally-recognized company that provides professional independent managers,
directors or special members. As used in this definition, the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management, policies or activities of a Person, whether
through ownership of voting securities, by contract or otherwise.
(q) Borrower shall not cause or permit the board of directors of
Borrower to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock or under any organizational document of Borrower, requires a unanimous
vote of the board of directors of Borrower unless at the time of such action
there shall be at least two members who are each an Independent Director.
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(r) Borrower shall conduct its business so that the assumptions made
with respect to Borrower in the Insolvency Opinion shall be true and correct in
all respects. In connection with the foregoing, Borrower hereby covenants and
agrees that it will comply with or cause the compliance with, (i) all of the
facts and assumptions (whether regarding the Borrower or any other Person) set
forth in the Insolvency Opinion, (ii) all the representations, warranties and
covenants in this Section 3.1.24, and (iii) all the organizational documents of
the Borrower.
(s) Borrower will not permit any Affiliate or constituent party
independent access to its bank accounts.
(t) Borrower shall pay the salaries of its own employees (if any) from
its own funds and maintain a sufficient number of employees (if any) in light of
its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from
its funds for services provided to it and pay from its own assets all
obligations of any kind incurred.
3.1.25 Tax Filings. To the extent required, Borrower has filed (or has
obtained effective extensions for filing) all federal, state and local tax
returns required to be filed and has paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable
by Borrower. Borrower believes that its tax returns (if any) properly reflect
the income and taxes of Borrower for the periods covered thereby, subject only
to reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.
3.1.26 Solvency. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured.
3.1.27 Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
3.1.28 Organizational Chart. The organizational chart attached as
Schedule III hereto, relating to Borrower and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.
3.1.29 Bank Holding Company. Borrower is not a "bank holding company"
or a direct or indirect subsidiary of a "bank holding company" as defined in the
Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.
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3.1.30 No Other Debt. Borrower has not borrowed or received debt
financing (other than permitted pursuant to this Agreement) that has not been
heretofore repaid in full.
3.1.31 Investment Company Act. Borrower is not (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
3.1.32 Access/Utilities. All 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 Property or in or through a recorded easement
in favor of the Property. All roads necessary for the full utilization of the
Property for its current purpose have been completed and dedicated to public use
and accepted by all governmental authorities or are the subject of access
easements for the benefit of the Property.
3.1.33 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 its assets or property, and Borrower does not have
any knowledge of any Person contemplating the filing of any such petition
against it.
3.1.34 Full and Accurate Disclosure. To the best of Borrower's
knowledge, no information contained in this Agreement, the other Loan Documents,
or any written statement furnished by or on behalf of Borrower pursuant to the
terms of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made. There is no fact or circumstance presently known to Borrower which has not
been disclosed to Lender and which materially adversely affects, or is
reasonably likely to materially adversely affect, the Property, Borrower or its
business, operations or condition (financial or otherwise).
3.1.35 Foreign Person. Borrower is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
3.1.36 Fraudulent Transfer. Borrower (a) has not entered into the Loan
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. The assets of Borrower do not and,
immediately following the execution and delivery of the Loan Documents will not,
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted. Borrower does not intend to, and does not believe
that it will, incur debts and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash reasonably expected to be received
by Borrower and the amounts reasonably expected to be payable on or in respect
of its obligations).
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3.1.37 No Change in Facts or Circumstances; Disclosure. To the best of
Borrower's knowledge, there has been no material adverse change in any
condition, fact, circumstance or event that would make the financial statements,
rent rolls, reports, certificates or other documents submitted in connection
with the Loan inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise materially and adversely affects the business
operations or the financial condition of Borrower or the Property.
3.1.38 Management Agreement. All of the representations and warranties
with respect to the Management Agreement set forth in Article VII of this
Agreement are true and correct in all respects.
3.1.39 Perfection of Accounts. Borrower hereby represents and warrants
to Lender that:
(a) This Agreement, together with the other Loan Documents, create a
valid and continuing security interest (as defined in the Uniform Commercial
Code) in the Accounts (as defined in the Cash Management Agreement) in favor of
Lender, which security interest is prior to all other Liens, other than
Permitted Encumbrances, and is enforceable as such against creditors of and
purchasers from Borrower. Other than in connection with the Loan Documents and
except for Permitted Encumbrances, Borrower has not sold or otherwise conveyed
the Accounts;
(b) The Accounts constitute "deposit accounts" or "securities
accounts" within the meaning of the Uniform Commercial Code, as set forth in the
Cash Management Agreement; and
(c) The Accounts are not in the name of any Person other than
Borrower, as pledgor, or Lender, as pledgee. Borrower has not consented to
Agent's complying with instructions with respect to the Accounts from any Person
other than Lender.
3.1.40 REA. Each REA is in full force and effect and neither Borrower
nor, to Borrower's actual knowledge, any other party to the REA, is in default
in any material respect thereunder, and to the best of Borrower's actual
knowledge, there are no conditions which, with the passage of time or the giving
of notice, or both, would constitute a material default thereunder. To
Borrower's actual knowledge, no REA has been modified, amended or supplemented
except as disclosed in any Title Insurance Policy.
3.1.41 Childcare Facilities.
(a) The operation, management and use of each Individual Property by
Borrower, Operating Company and Manager is in compliance in all material
respects with applicable federal, state, and local laws, regulations, quality
and safety standards, licensing standards, and requirements of the applicable
state department of health or department of social services and all other
federal, state, or local governmental authorities including, without limitation,
those requirements relating to such Individual Property's physical structure and
environment, licensing, and the operating policies of Manager (as Manager may
determine from time to time) except to the extent that non-compliance would not
reasonably be expected to have
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a material adverse affect on any Individual Property or the Borrower's ability
to perform its obligations under the Loan Documents.
(b) The licenses, permits, and regulatory agreements, approvals and
registrations relating to each Individual Property (i) may not be, and have not
been, transferred to any location other than any Individual Property; have not
been pledged as collateral security for any other loan or indebtedness; and are
held free from restrictions or known conflicts that would materially impair the
use or operation of any Individual Property as intended, and (b) are not
provisional, probationary or restricted, except to the extent such provisional,
probationary or restricted licenses or regulatory agreements, approvals,
registrations or permits are of such a nature that they would not reasonably be
expected to have a material adverse affect on any Individual Property or the
Borrower's ability to perform its obligations under the Loan Documents.
(c) None of Borrower, Operating Company or Manager is currently the
subject of any proceeding by any Governmental Authority, and no notice of any
violation has been received from a Governmental Authority that, in either case,
would reasonably be expected to have a material adverse affect on any Individual
Property or the Borrower's ability to perform its obligations under the Loan
Documents.
(d) None of Borrower, Operating Company or Manager has received a
statement of charges or deficiencies and no penalty enforcement actions have
been undertaken against any of them relating to any Individual Property by any
Governmental Authority during the last three calendar years which caused a
material adverse effect on the financial condition of such entity.
(e) The Management Agreement and Operating Lease are each in full
force and effect and no party to either agreement has defaulted thereunder in
any material respect.
(f) None of Borrower, Operating Company or Manager shall, other than
in the normal course of business, change the terms of its normal billing payment
with respect to the Property, including without limitation the amount and timing
of finance charges, fees and write-offs.
(g) None of Borrower, Operating Company or Manager has pledged its
receivables relating to the Property, including but not limited to tuition
payments, as collateral security for any other loan or indebtedness.
Section 3.2 Survival of Representations.
The representations and warranties set forth in Section 3.1 shall
survive, and any covenants contained in Section 3.1.8 and Section 3.1.24 only
shall continue, for so long as any amount remains payable to Lender under this
Agreement or any of the other Loan Documents.
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IV. BORROWER COVENANTS
Section 4.1 Borrower Affirmative Covenants.
Borrower hereby covenants and agrees with Lender that:
4.1.1 Existence; Compliance with Legal Requirements. Borrower and
Operating Company shall do or cause to be done all things necessary to preserve,
renew and keep in full force and effect their existence, rights, licenses,
permits and franchises and comply with all Legal Requirements applicable to them
and the Property, including, without limitation, Prescribed Laws.
4.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof at least ten (10) days prior the date such Taxes will become
delinquent. Borrower shall not permit or suffer and shall promptly discharge any
lien or charge against the Property. Notwithstanding the foregoing, after prior
notice to Lender, Borrower, at its own expense, may contest by appropriate legal
proceeding, conducted in good faith and with due diligence, the amount or
validity of any Taxes, Other Charges, any claims or judgments, including those
of mechanics, materialmen, suppliers, vendors or other similar Persons or any
Lien therefor or any Legal Requirement or the application of any instrument of
record affecting any Individual Property or any part thereof (other than the
Loan Documents, but including any REA), and may withhold payment of same pending
such proceedings if permitted by applicable law, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost; (iv) Borrower shall promptly upon final determination thereof pay the
amount of any such Taxes, Other Charges or other amounts being contested,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes,
Other Charges or other amounts being contested from the Property; and (vi) to
the extent not already reserved with Lender pursuant to Section 6.2 hereof or
bonded so as to remove any Lien or claim thereof from the Individual Property in
question or otherwise deposited or paid in connection with such proceedings,
Borrower shall deposit with Lender cash, or other security as may be approved by
Lender, acting reasonably, in an amount equal to one hundred twenty-five percent
(125%) of the contested amount, to insure the payment of any such Taxes, Other
Charges or other amounts being contested, together with all interest and
penalties thereon. Lender may pay over any such cash or other security held by
Lender to the claimant entitled thereto at any time when, in the good faith
judgment of Lender, the entitlement of such claimant is established and Lender
shall otherwise remit any remaining amounts to Borrower. Lender shall give
Borrower notice of any such payments promptly following the making thereof.
Notwithstanding anything to the contrary contained in this Section 4.1.2,
Borrower shall not be required to provide prior notice to Lender of any contest
of Taxes provided that Borrower pays the full amount of such Tax which is due to
the proper Governmental Authority prior to its initiation of any contest and
provided further that Borrower satisfies all of the conditions contained above
other than in subclause (vi) and has complied with all requirements of the
appropriate Governmental Authority with respect to the payment of such Taxes and
the posting of security thereof, if any.
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4.1.3 Litigation. Borrower shall give prompt notice to Lender of any
litigation or governmental proceedings pending or threatened against Borrower
which might reasonably be expected to materially adversely affect the Property
or Borrower's ability to perform its obligations hereunder or under the other
Loan Documents.
4.1.4 Access to Property. Borrower shall permit agents,
representatives and employees of Lender to inspect the Property or any part
thereof at reasonable hours upon at least forty eight (48) hours advance notice
to Borrower given by Lender to the Real Estate Department at Manager's corporate
headquarters (unless a Default shall have occurred and be continuing or Lender
has a good faith reason to believe that a Default exists, in which cases no
advance notice shall be required), provided, however, Lender's entry shall not
disrupt or disturb in any manner the use and operation of any Individual
Property as an early childhood learning center.
4.1.5 Further Assurances; Supplemental Mortgage Affidavits. Borrower
shall, at Borrower's sole cost and expense:
(a) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(b) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
4.1.6 Financial Reporting.
(a) Borrower shall keep and maintain or will cause to be kept and
maintained proper and accurate books and records, in accordance with GAAP or
such other basis as may be approved by Lender acting reasonably, reflecting the
financial affairs of Borrower. Lender shall have the right from time to time
during normal business hours upon reasonable notice to Borrower to examine such
books and records at the office of Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.
(b) Borrower shall furnish Lender annually, within ninety (90) days
following the end of each Fiscal Year, a statement prepared in accordance with
GAAP or such other basis as may be approved by Lender acting reasonably setting
forth a calculation of the Net Operating Income for each Individual Property and
on a cumulative basis for the Property. Such statement shall be prepared by
Manager and attached as an unaudited schedule to the audited financial
statements in connection with the Manager's annual audit by a "Big Four"
accounting firm or other independent certified public accountant acceptable to
Lender. Such statement will be subjected to the auditing procedures applied in
the audit of the Manager's basic financial statements and will be fairly stated
in all material respects when considered in relation to the basic financial
statements taken as a whole.
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(c) Such statement shall be accompanied by a certificate executed by
the chief financial officer of Borrower stating that such statement presents
fairly the results of operations of Borrower and each Individual Property in all
material respects. In addition, Borrower shall provide to Lender along with such
statement, reports regarding average tuition rate and full time equivalent
attendance, occupancy levels reached, management fees paid and Capital
Expenditures made at each Individual Property during such year. Borrower shall
also furnish to Lender an Officer's Certificate certifying as of the date
thereof whether to the best of Borrower's knowledge there exists an event or
circumstance which constitutes a Default or Event of Default by Borrower under
the Loan Documents and if such Default or Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.
(d) Borrower will furnish Lender on or before the forty-fifth (45th)
day after the end of each Fiscal Quarter (based on Borrower's Fiscal Year), the
following items, accompanied by a certificate from the chief financial officer
of Borrower, certifying that such items are true, correct, accurate and complete
and fairly present the financial condition and results of the operations of
Borrower and each Individual Property in accordance with GAAP or such other
basis as may be approved by Lender acting reasonably as applicable:
(i) quarterly and year-to-date statements of income and expense
prepared for such Fiscal Quarter with respect to each Individual Property,
with a calculation of Net Operating Income and reports regarding average
tuition rate and full time equivalent attendance, occupancy levels reached,
management fees paid and Capital Expenditures made at each Individual
Property during such period;
(ii) a calculation reflecting the Debt Service Coverage Ratio as of
the last day of such Fiscal Quarter, for such Fiscal Quarter and the last
four Fiscal Quarters combined; and
(iii) a comparison of the budgeted income and expenses and the actual
income and expenses for such Fiscal Quarter and year to date for the
Property taken as a whole, together with a detailed explanation of any
variances of (A) more than five percent (5.00%) and (B)(1) with respect to
the analysis for such Fiscal Quarter, in excess of $250,000.00 or (2) with
respect to the year to date analysis, in excess of $500,000.00, between
budgeted and actual amounts for such period and year to date.
(e) Intentionally Omitted.
(f) For each Fiscal Year, Borrower shall submit the Annual Budget to
Lender within five Business Days (5) following the date that such Annual Budget
is complete, provided that Borrower shall submit such Annual Budget to Lender
not later than the commencement of the Fiscal Year to which such Annual Budget
relates.
(g) Borrower shall furnish to Lender, within five (5) Business Days
after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of each Individual
Property and the financial affairs of Borrower as may be reasonably requested by
Lender.
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4.1.7 Title to the Property. Borrower will warrant and defend the
validity and priority of the Liens of the Mortgage and the Assignment of Leases
on the Property against the claims of all Persons whomsoever, subject only to
Permitted Encumbrances.
4.1.8 Estoppel Statement.
(a) After request by Lender, Borrower shall within ten (10) Business
Days furnish Lender with a statement, duly acknowledged and certified, stating
(i) the unpaid principal amount of the Note, (ii) the Applicable Interest Rate
of the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.
(b) After request by Borrower, Lender shall within ten (10) Business
Days furnish Borrower with a statement, duly acknowledged and certified, stating
(i) the unpaid principal amount of the Note, (ii) the Applicable Interest Rate
of the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) whether or not Lender has sent any notice of default under the Loan
Documents which remains uncured in the opinion of Lender and (v) that this
Agreement and the other Loan Documents have not been modified or, if modified,
giving particulars of such modification.
(c) Borrower shall deliver to Lender, upon request, an estoppel
certificate from the Tenant under the Operating Lease in form and substance
reasonably acceptable to Lender.
4.1.9 Leases.
(a) Except with respect to Immaterial Leases, all Leases and all
renewals, amendments and modifications thereof executed after the date hereof
shall be subject to Lender's prior approval.
(b) Borrower shall and shall cause Operating Company to (i) observe
and perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) enforce the terms, covenants and conditions
contained in the Leases upon the part of the lessee thereunder to be observed or
performed in a commercially reasonable manner, provided, however, Borrower shall
not terminate or accept a surrender of any Lease without Lender's prior
approval; (iii) not collect any of the Rents more than one (1) month in advance
(other than security deposits); (iv) not execute any assignment of lessor's
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); and (v) hold all security deposits under all Leases in accordance
with Legal Requirements. Upon request, Borrower shall furnish or shall cause
Operating Company to furnish Lender with executed copies of all Leases.
4.1.10 Alterations. Borrower shall obtain Lender's prior approval in
connection with any alterations to any Improvements that may have a material
adverse effect on Borrower's financial condition, the value of the Property or
the ongoing revenues and expenses of the Property, which approval may be granted
or withheld in Lender's sole discretion.
4.1.11 Interest Rate Cap. At all times during the term of the Loan
Borrower shall maintain in effect an Interest Rate Protection Agreement with an
initial notional amount
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equal to the amount of the Loan and with a Counterparty reasonably acceptable to
Lender having a Minimum Counterparty Rating. The notional amount of the Interest
Rate Protection Agreement may be reduced from time to time in amounts equal to
any prepayment of the principal amount of the Loan. If Borrower obtains one (1)
interest rate cap, the LIBOR strike rate under the Interest Rate Protection
Agreement shall be equal to or less than the Capped LIBOR Rate, or if Borrower
obtains more than one (1) interest rate cap, the blended LIBOR strike rate under
the Interest Rate Protection Agreement, as determined by Lender after
consultation with Borrower, shall be equal to or less than the Capped LIBOR
Rate. The Interest Rate Protection Agreement shall be in form and substance
substantially similar to the Interest Rate Protection Agreement in effect as of
the date hereof or as otherwise approved by Lender. In the event of any
downgrade or withdrawal of the rating of such Counterparty by any Rating Agency
below the Minimum Counterparty Rating or the placement by ▇▇▇▇▇'▇ of such
Counterparty "On Watch for Downgrade" from the Minimum Counterparty Rating,
Borrower shall replace the Interest Rate Protection Agreement not later than
thirty (30) Business Days following receipt of notice from Lender of such
downgrade or withdrawal with an Interest Rate Protection Agreement in form and
substance reasonably satisfactory to Lender (and meeting the requirements set
forth in this Section 4.1.11) from a Counterparty reasonably acceptable to
Lender having a Minimum Counterparty Rating; provided, however, that if any
Rating Agency withdraws or downgrades the credit rating of the Counterparty
below the Minimum Counterparty Rating or if ▇▇▇▇▇'▇ places such Counterparty "On
Watch for Downgrade" from the Minimum Counterparty Rating, Borrower shall not be
required to replace the Counterparty under the Interest Rate Protection
Agreement provided that within five (5) days following Lender's notice to
Borrower of such downgrade, withdrawal or placement "On Watch for Downgrade" (y)
such Counterparty or an Affiliate thereof posts additional collateral acceptable
to the Rating Agencies securing its obligations under the Interest Rate
Protection Agreement or (z) an Affiliate of such Counterparty with a Minimum
Counterparty Rating delivers a guaranty acceptable to the Rating Agencies
guaranteeing such Counterparty's obligations under the Interest Rate Protection
Agreement. Notwithstanding the foregoing, if S&P withdraws or downgrades the
credit rating of such Counterparty below "A-1", or ▇▇▇▇▇'▇ withdraws or
downgrades the credit rating of such Counterparty below "A2" (if the
Counterparty has only a long term rating from ▇▇▇▇▇'▇) or below "A3" or "P-2"
(if the Counterparty has both long term and short term ratings from ▇▇▇▇▇'▇),
Borrower shall replace the Interest Rate Protection Agreement not later than
twenty (20) days following receipt of notice from Lender of such downgrade or
withdrawal with an Interest Rate Protection Agreement in form and substance
reasonably satisfactory to Lender (and meeting the requirements set forth in
this Section 4.1.11) from a Counterparty reasonably acceptable to Lender having
a Minimum Counterparty Rating. The initial Interest Rate Protection Agreement
(and any replacement thereof) shall cover the period from the Closing Date at
least through July 8, 2006; all Interest Rate Protection Agreements thereafter
obtained (and any replacements thereof) shall cover a period of at least one (1)
year.
4.1.12 Material Agreements. Borrower shall (a) promptly perform and/or
observe all of the material covenants and agreements required to be performed
and observed by it under each Material Agreement to which it is a party, and do
all things necessary to preserve and to keep unimpaired its rights thereunder,
(b) promptly notify Lender of the giving of any notice of any default by any
party under any Material Agreement of which it is aware and (c) promptly enforce
the performance and observance of all of the material covenants and
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agreements required to be performed and/or observed by the other party under
each Material Agreement to which it is a party in a commercially reasonable
manner.
4.1.13 Performance by Borrower. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by Borrower, and shall not enter into or
otherwise suffer or permit any amendment, waiver, supplement, termination or
other modification of any Loan Document executed and delivered by Borrower
without the prior consent of Lender.
4.1.14 Costs of Enforcement/Remedying Defaults. In the event (a) that
the Mortgage is foreclosed in whole or in part or the Note or any other Loan
Document is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any Lien or Mortgage prior to or
subsequent to the Mortgage in which proceeding Lender is made a party, (c) of
the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or Guarantor or an assignment by Borrower or Guarantor for
the benefit of its creditors, or (d) Lender shall remedy or attempt to remedy
any Event of Default hereunder, Borrower shall be chargeable with and agrees to
pay all costs incurred by Lender as a result thereof, including costs of
collection and defense (including reasonable attorneys', experts', consultants'
and witnesses' fees and disbursements) in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, which
shall be due and payable upon five (5) Business Days notice to Borrower,
together with interest thereon from the date incurred by Lender at the Default
Rate, and together with all required service or use taxes.
4.1.15 Business and Operations. Borrower will continue to engage in
the businesses currently conducted by it as and to the extent the same are
necessary for the ownership and leasing of the Property. Borrower will qualify
to do business and will remain in good standing under the laws of each
jurisdiction as and to the extent the same are required for the ownership and
leasing of the related Property. Borrower shall at all times cause the Operating
Company to maintain each Individual Property as a KinderCare child care center.
4.1.16 Loan Fees. Borrower shall pay all fees and costs (including,
without limitation, all origination and commitment fees) required of Borrower
pursuant to the terms of that certain commitment letter between KinderCare
Learning Centers, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. dated March 28,
2003
4.1.17 Fire and Zoning Code Violations. Borrower shall certify to
Lender that it has remedied the violations listed on Schedule XIV no later than
February 1, 2004 and, at the request of Lender, provide evidence reasonably
satisfactory to Lender regarding same.
Section 4.2 Borrower Negative Covenants.
Borrower covenants and agrees with Lender that:
4.2.1 Due on Sale and Encumbrance; Transfers of Interests. Except as
set forth in Section 8.2 hereof, without the prior consent of Lender, neither
Borrower nor any other Person having a direct or indirect ownership or
beneficial interest in Borrower or Operating Company shall sell, convey,
mortgage, grant, bargain, encumber, pledge, assign or transfer any interest,
direct or indirect, in the Borrower, the Operating Company, the Property or any
part
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thereof, whether voluntarily or involuntarily (except in the case of an
involuntary Condemnation), in violation of the covenants and conditions set
forth in the Mortgage and this Agreement (each, a "Transfer").
4.2.2 Liens. Borrower shall not create, incur, assume or suffer to
exist any Lien on any portion of the Property except for Permitted Encumbrances
or Liens permitted under Section 4.1.2 hereof.
4.2.3 Dissolution. Borrower shall not (i) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(ii) engage in any business activity not related to the ownership and operation
of the Property or (iii) transfer, lease (except the Operating Lease) or sell,
in one transaction or any combination of transactions, all or substantially all
of the property or assets of Borrower except to the extent expressly permitted
by the Loan Documents.
4.2.4 Change in Business. Borrower shall not enter into any line of
business other than the ownership and operation of the Property.
4.2.5 Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
4.2.6 Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the equity
holders of Borrower except in the ordinary course of business and on terms which
are fully disclosed to Lender in advance and are no less favorable to Borrower
or such Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party.
4.2.7 Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender, which consent
shall not be unreasonably withheld, conditioned or delayed.
4.2.8 Assets. Borrower shall not purchase or own any property other
than the Property and any property necessary or incidental for the operation of
the Property.
4.2.9 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of any Individual Property (i) with any other real
property constituting a tax lot separate from any Individual Property, and (ii)
with any portion of any Individual Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to any Individual Property.
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4.2.10 Principal Place of Business. Borrower shall not change its
principal place of business from the address set forth on the first page of this
Agreement without first giving Lender thirty (30) days prior notice.
4.2.11 ERISA. (a) Borrower shall not engage in any transaction if it
knows or should know at the time of the transaction that a reasonably likely
direct consequence of the transaction would be to cause an obligation or an
action taken or to be taken by it hereunder, or the exercise by Lender of any of
its rights under the Note, this Agreement or the other Loan Documents, to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under ERISA, without the consent of the Lender, which consent shall
not be unreasonably withheld.
(b) Borrower shall deliver to Lender such certifications or other
evidence from time to time (but no more frequently than once in any twelve (12)
month period) throughout the term of the Loan, as reasonably requested by Lender
in its sole discretion, that (A) Borrower is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(32) of ERISA; and/or (B)
Borrower is not subject to any state statute regulating investments of, or
fiduciary obligations with respect to, governmental plans, as if it were a
governmental plan or as if its assets were assets of a governmental plan.
4.2.12 Material Agreements. Borrower shall not, without Lender's prior
consent (which consent shall not be unreasonably withheld, delayed or
conditioned): (a) enter into, surrender or terminate any Material Agreement to
which it is a party (unless the other party thereto is in material default and
the termination of such agreement would be commercially reasonable), (b)
increase or consent to the increase of the amount of any charges under any
Material Agreement to which it is a party, except as provided therein or on an
arms'-length basis and commercially reasonable terms; or (c) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under any Material Agreement to which it is a party in any material
respect, except on an arms'-length basis and commercially reasonable terms.
4.2.13 REA. Borrower agrees that without the prior consent of Lender,
Borrower will not execute modifications to the REA if such modifications will
have a material adverse effect on the use, operation or value (including the Net
Operating Income) of the Property, taken as a whole, or the ability of Borrower
to pay its obligations in respect of the Loan.
4.2.14 Operating Lease. Borrower agrees that without the prior consent
of Lender, Borrower will not modify, amend, terminate or accept a surrender of
the Operating Lease.
4.2.15 Management Agreement. Borrower agrees that without the prior
consent of Lender, Borrower shall not permit the modification, amendment,
termination or surrender of the Management Agreement by either of the parties
thereto.
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V. INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1 Insurance.
5.1.1 Insurance Policies. (a) Borrower shall obtain and maintain, or
cause to be maintained, insurance for Borrower and the Property providing at
least the following coverages:
(i) comprehensive all risk insurance (which may exclude coverage for
"acts of terrorism" or other similar acts or events) on the Improvements and the
personal property at each Individual Property, including contingent liability
from Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall be satisfied by comprehensive all risk coverage in an amount not
less than One Hundred Million and No/100 Dollars ($100,000,000.00) for any one
loss and shall mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of depreciation;
(B) containing an agreed amount endorsement with respect to the Improvements and
personal property at each Individual Property waiving all co-insurance
provisions; (C) except as set forth on Schedule XIII, providing for no
deductible in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000)
for all such insurance coverage; and (D) containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the Improvements or the use of
each Individual Property shall at any time constitute legal non-conforming
structures or uses. In addition, Borrower shall obtain: (y) if any portion of
the Improvements on any Individual Property is currently or at any time in the
future located in a federally designated "special flood hazard area", flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note allocated to the Individual Property or (2) the
maximum amount of such insurance available under the National Flood Insurance
Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended; and (z) earthquake
insurance in amounts and in form and substance satisfactory to Lender in the
event any Individual Property is located in an area designated as Seismic Zone 3
or 4, provided that the insurance pursuant to clauses (y) and (z) hereof shall
be on terms consistent with the comprehensive all risk insurance policy required
under this subsection (i).
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about each Individual Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit, excluding umbrella coverage, of not
less than One Million and No/100 Dollars ($1,000,000.00); (B) to continue at not
less than the aforesaid limit until required to be changed by Lender by reason
of changed economic conditions making such protection inadequate; and (C) to
cover at least the following hazards: (1) premises and operations; (2) products
and completed operations on an "if any" basis; (3) independent contractors; (4)
blanket contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 9 of the Mortgage to the
extent the same is available;
(iii) business income insurance (A) with loss payable to Lender; (B)
covering all risks required to be covered by the insurance provided for in
subsection (i) above for a period
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commencing at the time of loss for such length of time as it takes to repair or
replace with the exercise of due diligence and dispatch; and (C) containing an
extended period of indemnity endorsement which provides that after the physical
loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income returns to the same level it
was at prior to the loss, and notwithstanding that the policy may expire prior
to the end of such period. All proceeds payable to Lender pursuant to this
subsection shall be held by Lender and shall be applied to the obligations
secured by the Loan Documents from time to time due and payable hereunder and
under the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured by the
Loan Documents on the respective dates of payment provided for in the Note and
the other Loan Documents except to the extent such amounts are actually paid out
of the proceeds of such business income insurance;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Property coverage form does not otherwise apply, (A) owner's contingent or
protective liability insurance covering claims not covered by or under the terms
or provisions of the above mentioned commercial general liability insurance
policy; and (B) the insurance provided for in subsection (i) above written in a
so-called builder's risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant to subsection (i) above, (3)
including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
state in which each Individual Property is located, and employer's liability
insurance with a limit of at least One Million and No/100 Dollars
($1,000,000.00) per accident and per disease per employee (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with the
commercial property insurance policy required under subsection (i) above;
(vii) umbrella liability insurance in addition to primary coverage in
an amount not less than One Hundred Million and No/100 Dollars ($100,000,000.00)
per occurrence on terms consistent with the commercial general liability
insurance policy required under subsection (ii) above and (viii) below;
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, of Four Million and No/100 Dollars
($4,000,000.00);
(ix) so-called "dramshop" insurance or other liability insurance
required in connection with the sale of alcoholic beverages, if applicable;
(x) insurance against employee dishonesty in an amount not less than
Five Million and No/100 Dollars ($5,000,000.00) and with a deductible not
greater than Fifty Thousand and No/100 Dollars ($50,000), if applicable; and
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(xi) upon sixty (60) days' notice, such other reasonable insurance and
in such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to each Individual Property located in or around
the region in which such Individual Property is located; provided that with
respect to any insurance providing coverage against "acts of terrorism" or other
similar acts or events which is requested by Lender, such coverage shall be
obtained by Borrower at the sole cost and expense of Lender.
(b) All insurance provided for in Section 5.1.1(a) shall be obtained
under valid and enforceable policies (collectively, the "Policies" or in the
singular, the "Policy") and, to the extent not specified above, shall be subject
to the approval of Lender as to deductibles, loss payees and insureds. Not less
than five (5) Business Days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Borrower to Lender.
(c) Intentionally Omitted.
(d) All Policies of insurance provided for or contemplated by Section
5.1.1(a) shall be primary coverage and, except for the Policy referenced in
Section 5.1.1(a)(v), shall name Borrower as the insured and Lender and its
successors and/or assigns as the additional insured, as its interests may
appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender. Borrower shall not procure or permit any
of its constituent entities to procure any other insurance coverage which would
be on the same level of payment as the Policies or would adversely impact in any
way the ability of Lender or Borrower to collect any proceeds under any of the
Policies.
(e) All Policies of insurance provided for in Section 5.1.1(a), except
for the Policies referenced in Section 5.1.1(a)(v) and (a)(viii) shall contain
clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the provisions of
any Policy, which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;
(ii) the Policy shall not be canceled without at least thirty (30)
days' notice to Lender and any other party named therein as an additional
insured and, if obtainable by Borrower using commercially reasonable efforts,
shall not be materially changed (other than to increase the coverage provided
thereby) without such a thirty (30) day notice; and
(iii) Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, without notice to
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Borrower, to take such action as Lender deems necessary to protect its interest
in the Property, including, without limitation, the obtaining of such insurance
coverage as Lender in its sole discretion deems appropriate and all premiums
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and
until paid shall be secured by the Mortgage and shall bear interest at the
Default Rate.
(g) In the event of foreclosure of the Mortgage or other transfer of
title to the Property in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.
5.1.2 Insurance Company. The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the state
in which each Individual Property is located and having a claims paying ability
rating of "A-" or better by S&P and an insurance financial strength rating of
"A3" by ▇▇▇▇▇'▇. If a Securitization occurs, (i) the foregoing required
insurance company rating by a Rating Agency not rating any Securities shall be
disregarded and (ii) if the insurance company complies with the aforesaid S&P
required rating (and S&P is rating the Securities) and the other Rating Agencies
rating the Securities do not rate the insurance company, such insurance company
shall be deemed acceptable with respect to such Rating Agency not rating such
insurance company.
Section 5.2 Casualty and Condemnation.
5.2.1 Casualty. If any Individual Property shall sustain a Casualty,
Borrower shall give prompt notice of such Casualty to Lender and shall promptly
commence and diligently prosecute to completion the repair and restoration of
such Individual Property as nearly as possible to the condition such Individual
Property was in immediately prior to such Casualty (a "Restoration") and
otherwise in accordance with Section 5.3, it being understood, however, that
Borrower shall not be obligated to restore such Individual Property to the
precise condition of the Individual Property prior to such Casualty provided the
Individual Property is restored, to the extent practicable, to be of at least
equal value and of substantially the same character as prior to the Casualty.
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to, make proof of
loss if not made promptly by Borrower. In the event of a Casualty where the loss
does not exceed the Restoration Threshold, Borrower may settle and adjust such
claim; provided that (a) no Event of Default has occurred and is continuing and
(b) such adjustment is carried out in a commercially reasonable and timely
manner. In the event of a Casualty where the loss exceeds the Restoration
Threshold or if an Event of Default then exists, Borrower may settle and adjust
such claim only with the consent of Lender (which consent shall not be
unreasonably withheld, conditioned or delayed) and Lender shall have the
opportunity to participate, at Borrower's cost, in any such adjustments.
Notwithstanding any Casualty, Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement.
5.2.2 Condemnation. Borrower shall give Lender prompt notice of any
actual or threatened Condemnation by any Governmental Authority of all or any
part of any Individual
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Property which Condemnation would, in the reasonable judgment of Borrower, have
a material and adverse impact on the use or operation of such Individual
Property or the Award obtained by Borrower in connection therewith would exceed
Seventy Five Thousand and No/100 Dollars ($75,000.00) and shall deliver to
Lender a copy of any and all papers served in connection with such proceedings.
Provided no Event of Default has occurred and is continuing, in the event of a
Condemnation where the amount of the taking does not exceed the Restoration
Threshold, Borrower may settle and compromise such Condemnation; provided that
the same is effected in a commercially reasonable and timely manner. In the
event of a Condemnation where the amount of the taking exceeds the Restoration
Threshold or if an Event of Default then exists, Borrower may settle and
compromise the Condemnation only with the consent of Lender (which consent shall
not be unreasonably withheld, conditioned or delayed) and Lender shall have the
opportunity to participate, at Borrower's cost, in any litigation and settlement
discussions in respect thereof and Borrower shall from time to time deliver to
Lender all instruments requested by Lender to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any
Condemnation, Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement. Lender's
right to interest on the Debt as provided herein and in the Note shall not be
limited to the interest paid on the Award by any Governmental Authority. If any
Improvement on any Individual Property or any portion thereof is taken by any
Governmental Authority, Borrower shall promptly commence and diligently
prosecute the Restoration of such Improvement and otherwise comply with the
provisions of Section 5.3. If any Individual Property is sold, through
foreclosure or other exercise of a remedy by Lender, prior to the receipt by
Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
5.2.3 Casualty Proceeds. Notwithstanding the last sentence of Section
5.1.1(a)(iii) and provided no Event of Default exists hereunder, proceeds
received by Lender on account of the business interruption insurance specified
in Subsection 5.1.1(a)(iii) above with respect to any Casualty shall be
deposited by Lender directly into the Deposit Account (as defined in the Cash
Management Agreement) but (a) only to the extent it reflects a replacement for
(i) lost Rents that would have been due under Leases existing on the date of
such Casualty or other recurring revenue of the impacted Individual Property,
and/or (ii) lost Rents under Leases that had not yet been executed and delivered
at the time of such Casualty which Borrower has proven to the insurance company
would have been due under such Leases (and then only to the extent such proceeds
disbursed by the insurance company reflect a replacement for such past due
Rents) and (b) only to the extent necessary to fully make the disbursements
required by Sections 3.3(a)(i) through (v) and Sections 3.3(b)(i) and (ii) of
the Cash Management Agreement. All other such proceeds shall be held by Lender
and disbursed in accordance with Section 5.3 hereof.
Section 5.3 Delivery of Net Proceeds.
5.3.1 Minor Casualty or Condemnation. If a Casualty or Condemnation
has occurred to any one or more Individual Properties and the Net Proceeds for
all Individual Properties which have suffered a Casualty or Condemnation (and
have not been fully restored) shall be less than the Restoration Threshold and
the costs of completing the Restoration shall be
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less than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to
Borrower. Promptly after receipt of the Net Proceeds, Borrower shall commence
and satisfactorily complete with due diligence the Restoration in accordance
with the terms of this Agreement. If any Net Proceeds are received by Borrower
and may be retained by Borrower pursuant to the terms hereof, such Net Proceeds
shall, until completion of the Restoration, be held in trust for Lender and
shall be segregated from other funds of Borrower to be used to pay for the cost
of Restoration in accordance with the terms hereof.
5.3.2 Major Casualty or Condemnation. (a) If a Casualty or
Condemnation has occurred to any one or more Individual Properties and the Net
Proceeds, when taken together with the Net Proceeds obtained in connection with
any previous Casualty or Condemnation at any Individual Property which has not
yet been fully restored, are equal to or greater than the Restoration Threshold
or the costs of completing the Restoration, when taken together with the costs
of completing any Restoration to any Individual Property which was the subject
of a previous Casualty or Condemnation which has not yet been fully completed,
is equal to or greater than the Restoration Threshold, Lender shall make the Net
Proceeds available for the Restoration, provided that each of the following
conditions are met:
(i) no Event of Default shall have occurred and be continuing;
(ii) in the event the Net Proceeds are an Award, in Borrower's or the
Manager's (as agent of Borrower) reasonable judgment, the Property shall be
capable of being restored so that it can continue to be used as a KinderCare
child care center when the Restoration is complete;
(iii) Intentionally Omitted;
(iv) Borrower shall commence the Restoration in a reasonably
practicable period of time and shall diligently pursue the same to satisfactory
completion;
(v) Lender shall be satisfied that any operating deficits and all
payments of principal and interest under the Note will be paid during the period
required for Restoration from (A) the Net Proceeds, or (B) other funds of
Borrower;
(vi) Lender shall be satisfied that the Restoration will be completed
on or before the earliest to occur of (A) the date three (3) months prior to the
Maturity Date, (B) the earliest date required for such completion under the
terms of any Lease or (C) such time as may be required under applicable Legal
Requirements in order to repair and restore such Individual Property to the
condition it was in immediately prior to such Casualty or to as nearly as
possible the condition it was in immediately prior to such Condemnation, as
applicable;
(vii) such Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under all applicable Legal
Requirements;
(viii) the Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable Legal
Requirements; and
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(ix) such Casualty or Condemnation, as applicable, does not result in
the loss of access to the Individual Property or the related Improvements.
(b) The Net Proceeds shall be paid directly to Lender and held by
Lender in an interest-bearing account and, until disbursed in accordance with
the provisions of this Section 5.3.2, shall constitute additional security for
the Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by,
Borrower from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all requirements set forth in Section
5.3.2(a) have been satisfied, (B) all materials installed and work and labor
performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid for in
full, and (C) there exist no notices of pendency, stop orders, mechanic's or
materialman's liens or notices of intention to file same, or any other liens or
encumbrances of any nature whatsoever on the Individual Property arising out of
the Restoration which have not been fully bonded to the satisfaction of Lender
and discharged of record.
(c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant") not to be unreasonably
withheld, conditioned or delayed. The plans and specifications shall require
that the Restoration be completed in a first-class workmanlike manner at least
equivalent to the quality and character of the original work in the Improvements
(provided, however, that in the case of a partial Condemnation, the Restoration
shall be done to the extent reasonable practicable after taking into account the
consequences of such partial Condemnation), so that upon completion thereof, the
Individual Property shall be at least equal in value and general utility to such
Individual Property prior to the damage or destruction; it being understood,
however, that Borrower shall not be obligated to restore the Individual Property
to the precise condition of the Individual Property prior to such Casualty
provided the Individual Property is restored, to the extent practicable, to be
of at least equal value and of substantially the same character as prior to the
Casualty. Borrower shall restore all Improvements such that when they are fully
restored and/or repaired, such Improvements and their contemplated use fully
comply with all applicable material Legal Requirements. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration, as well
as the contracts under which they have been engaged, shall be subject to the
reasonable approval of Lender and the Casualty Consultant. All commercially
reasonable costs and expenses incurred by Lender in connection with recovering,
holding and advancing the Net Proceeds for the Restoration including, without
limitation, reasonable attorneys' fees and disbursements and the Casualty
Consultant's fees and disbursements, shall be paid by Borrower.
(d) In no event shall Lender be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term "Casualty Retainage"
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 5.3.2(d), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen
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engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the Individual Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and, if
requested by Lender, Lender receives an endorsement to the Title Insurance
Policy insuring the continued priority of the lien of the Mortgage and evidence
of payment of any premium payable for such endorsement. If required by Lender,
the release of any such portion of the Casualty Retainage shall be approved by
the surety company, if any, which has issued a payment or performance bond with
respect to the contractor, subcontractor or materialman.
(e) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(f) If at any time the Net Proceeds or the undisbursed balance thereof
shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the "Net
Proceeds Deficiency") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 5.3.2 shall constitute additional security for the Debt.
(g) The excess, if any, of the Net Proceeds and the remaining balance,
if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 5.3.2, and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under
any of the Loan Documents; provided, however, the amount of such excess returned
to Borrower in the case of a Condemnation shall not exceed the amount of Net
Proceeds Deficiency deposited by Borrower with the balance being applied to the
Debt in the manner provided for in subsection 5.3.2(h).
(h) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 5.3.2(g) may be retained and applied by Lender toward the payment of
the Debt, whether or not then due and
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payable, in such order, priority and proportions as Lender in its sole
discretion shall deem proper, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to Borrower for such purposes as Lender shall
designate.
VI. RESERVE FUNDS
Section 6.1 Intentionally Omitted.
Section 6.2 Tax Funds.
6.2.1 Deposits of Tax Funds. On the Closing Date, Borrower shall
deposit with Agent the amount of Four Million Seventy Two Thousand Eight Hundred
Fifty Eight and 92/100 Dollars ($4,072,858.92) and, pursuant to the Cash
Management Agreement, there shall be deposited on each Monthly Payment Date an
amount equal to one-twelfth of the Taxes that Borrower estimates it will be
required to pay, as reflected in the Annual Budget of Borrower pertaining to the
applicable Fiscal Year, during the next ensuing twelve (12) months in order to
accumulate sufficient funds to pay all such Taxes at least ten (10) days prior
to the date such Taxes are past due. Amounts deposited pursuant to this Section
6.2.1 are referred to herein as the "Tax Funds". If at any time Lender
reasonably determines that the Tax Funds will not be sufficient to pay the
Taxes, Lender shall notify Borrower of such determination and the monthly
deposits for Taxes shall be increased by the amount that Lender estimates is
sufficient to make up the deficiency at least ten (10) days prior to the
respective due dates for the Taxes; provided that if Borrower receives notice of
any deficiency after the date that is ten (10) days prior to the date that Taxes
are due, Borrower will deposit such amount within three (3) Business Days after
its receipt of such notice.
6.2.2 Release of Tax Funds. Borrower shall, in accordance with the
provisions of Section 4.1.2, be required to pay all Taxes prior to the date such
Taxes become delinquent. From time to time Manager as agent of Borrower shall be
entitled to disbursements of Tax Funds made in accordance with the provisions of
the Cash Management Agreement. In the event that Borrower shall not have paid or
caused to be paid the Taxes relating to an Individual Property prior to the date
that is ten (10) days before such Taxes shall become delinquent, but provided
that Lender has not received a notice from Borrower stating that such Taxes are
being contested and a copy of all items required to be delivered to permit such
a contest hereunder (in which case Lender shall withhold payment of such Taxes
in accordance with the terms of this Agreement), Lender shall have the right to
apply the Tax Funds to payments of Taxes relating to the applicable Individual
Property. In making any payment relating to Taxes, Lender may do so according to
any ▇▇▇▇, statement or estimate procured from the appropriate public office
(with respect to Taxes) 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. If the amount of the Tax Funds
shall exceed the amounts due for Taxes, Lender shall, at the request of Borrower
which may be made on the first (1st) Business Day of each Fiscal Quarter, return
any excess to Borrower or credit such excess against future payments to be made
to the Tax Funds. Any Tax Funds remaining after the Debt has been paid in full
shall be returned to Borrower.
In the event Lender releases an Individual Property as a result of the
exercise of Borrower's rights under Section 11.28 or Section 11.29 hereof, Agent
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shall, simultaneous to the release of the Liens of the Loan Documents with
respect to such Individual Property, deliver, or cause the delivery, to Borrower
from the Tax Funds an amount equal to the Tax Funds deposited by Borrower into
the Tax Account with respect to such Individual Property (to the extent such Tax
Funds are in excess of the Tax Funds that will be required to be reserved in the
Tax Account with respect to any Substitute Property in connection with a
substitution pursuant to Section 11.29 hereof).
Section 6.3 Insurance Funds.
6.3.1 Deposits of Insurance Funds. On the Closing Date, Borrower shall
deposit with Agent the amount of One Million Eight Hundred Seventy Thousand Two
Hundred Forty Seven and 50/100 Dollars ($1,870,247.50) and, pursuant to the Cash
Management Agreement, there shall be deposited on each Monthly Payment Date an
amount equal to one-twelfth of the Insurance Premiums that Borrower estimates it
will be required to pay, as reflected in the Annual Budget of Borrower
pertaining to the applicable Fiscal Year, for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to accumulate
sufficient funds to pay all such Insurance Premiums at least ten (10) days prior
to the expiration of the Policies. Amounts deposited pursuant to this Section
6.3.1 are referred to herein as the "Insurance Funds". If at any time Lender
reasonably determines that the Insurance Funds will not be sufficient to pay the
Insurance Premiums, Lender shall notify Borrower of such determination and the
monthly deposits for Insurance Premiums shall be increased by the amount that
Lender reasonably estimates is sufficient to make up the deficiency at least
thirty (30) days prior to expiration of the Policies.
6.3.2 Release of Insurance Funds. Borrower shall, in accordance with
the provisions of Article V, be required to pay all Insurance Premiums prior to
the date is ten (10) days before such Insurance Premiums become due and payable.
From time to time Manager as agent of Borrower shall be entitled to
disbursements of Insurance Funds made in accordance with the provisions of the
Cash Management Agreement. In the event that Borrower shall not have paid or
caused to be paid the Insurance Premiums relating to a Policy required hereunder
prior to the date that is ten (10) days before such Insurance Premium shall
become due and payable, Lender shall have the right to apply the Insurance Funds
to the payment of the applicable Insurance Premiums. In making any payment
relating to Insurance Premiums, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the insurer or its agent, without inquiry
into the accuracy of such ▇▇▇▇, statement or estimate. If the amount of the
Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender
shall, at the request of Borrower which may be made on the first (1st) Business
Day of each Fiscal Quarter, return any excess to Borrower or credit such excess
against future payments to be made to the Insurance Funds. Any Insurance Funds
remaining after the Debt has been paid in full shall be returned to Borrower.
Section 6.4 Capital Expenditure Funds.
6.4.1 Deposits of Capital Expenditure Funds. On the Closing Date,
Borrower shall deposit with Agent the amount of One Million Four Hundred Sixty
Three Thousand Three Hundred Eighty Two and No/100 Dollars ($1,463,382.00) and,
pursuant to the Cash Management Agreement, there shall be deposited with Lender
on each Monthly Payment Date
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an amount equal to the lesser of (a) Five Hundred Thousand and No/100 Dollars
($500,000.00) and (b) the amount necessary to maintain a balance of Six Million
and No/100 Dollars of Capital Expenditures Funds, which amounts shall be for
annual Capital Expenditures and the Required Repairs. Lender's prior approval
(not to be unreasonably withheld, conditioned or delayed) shall be required with
respect to any Capital Expenditure that is not reflected in the Annual Budget
and is estimated by Borrower in its reasonable discretion to cost in excess of
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00). Amounts deposited
pursuant to this Section 6.4.1 are referred to herein as the "Capital
Expenditure Funds".
6.4.2 Release of Capital Expenditure Funds. (a) Lender shall direct
Agent to disburse Capital Expenditure Funds only for Capital Expenditures.
(b) Lender shall direct Agent to disburse to Borrower or any Person
designated by Borrower the Capital Expenditure Funds upon satisfaction by
Borrower of each of the following conditions: (i) Borrower shall submit a
request for payment to Lender at least ten (10) days prior to the date on which
Borrower requests such payment be made and specifies the Capital Expenditures or
Required Repairs, as applicable, to be reimbursed with the requested
disbursement, (ii) on the date such request is received by Lender and on the
date such payment is to be made, no Event of Default shall have occurred and be
continuing, (iii) Lender shall have received a certificate from Borrower stating
that the Capital Expenditures or Required Repairs, as applicable, to be
reimbursed or the portion of the work with respect to which Borrower is seeking
reimbursement for by the requested disbursement have been completed in good and
workmanlike manner and in accordance with all applicable federal, state and
local laws, rules and regulations, (iv) Lender, at its option in the event that
Lender has a good faith suspicion that Borrower, Operating Company or Manager
has committed fraud in connection with such reimbursement request, shall have
received a copy of the invoice and the check for payment with respect to the
Capital Expenditures or Required Repairs, as applicable, to be paid for by the
requested disbursement and (v) at Lender's option if the Capital Expenditures or
Required Repairs, as applicable, are not reflected on the Annual Budget and the
cost of such Capital Expenditures or Required Repairs, as applicable, exceeds
$150,000.00, Lender shall have received a title search for the Property
indicating that the Property is free from all liens, claims and other
encumbrances not previously approved by Lender and/or a report satisfactory to
Lender in its reasonable discretion from an architect or engineer approved by
Lender in respect of such architect or engineer's inspection of the Capital
Expenditures or Required Repairs, as applicable. Lender shall not be required to
disburse Capital Expenditure Funds more frequently than once each calendar
month, unless such requested disbursement is in an amount greater than the
Minimum Disbursement Amount (or a lesser amount if the total amount of Capital
Expenditure Funds is less than the Minimum Disbursement Amount, in which case
only one disbursement of the amount remaining in the account shall be made).
(c) Nothing in this Section 6.4.2 shall (i) make Lender responsible
for making or completing the Capital Expenditures Work or Required Repairs; (ii)
require Lender to expend funds in addition to the Capital Expenditure Funds to
complete any Capital Expenditures Work or Required Repairs; (iii) obligate
Lender to proceed with the Capital Expenditures Work or Required Repairs; or
(iv) obligate Lender to demand from Borrower additional sums to complete any
Capital Expenditures Work or Required Repairs.
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(d) At Lender's request, if the Capital Expenditures or Required
Repairs, as applicable, are not reflected on the Annual Budget and the cost of
such Capital Expenditures or Required Repairs, as applicable, exceeds
$150,000.00, Borrower shall provide Lender with any materials which Lender
reasonably requires in order to determine the progress of any Capital
Expenditures Work or Required Repairs, the types of materials being used in
connection therewith and its compliance with all Legal Requirements. In
addition, if the Capital Expenditures or Required Repairs, as applicable, are
not reflected on the Annual Budget and the cost of such Capital Expenditures or
Required Repairs, as applicable, exceeds $150,000.00, at Lender's request,
Borrower shall provide copies of all plans and shop drawings relating to such
Capital Expenditures Work or Required Repairs and shall cause all architects,
engineers, contractors and/or subcontractors involved in the completion of such
Capital Expenditures Work or Required Repairs to cooperate with Lender to
provide any certifications or written materials relating to such Capital
Expenditures Work or Required Repairs, including without limitation, a
certificate of completion (in form reasonably acceptable to Lender) by an
independent qualified professional architect acceptable to Lender prior to the
disbursement of Capital Expenditure Funds.
(e) At Lender's option, if the Capital Expenditures or Required
Repairs, as applicable, are not reflected on the Annual Budget and the cost of
such Capital Expenditures or Required Repairs, as applicable, exceeds
$150,000.00, Lender may require an inspection of the applicable Individual
Property at Lender's sole cost and expense prior to making a disbursement of
Capital Expenditure Funds in order to verify completion of the Capital
Expenditures Work or Required Repairs, as applicable, for which reimbursement is
sought. Lender may require that such inspection be conducted by an appropriate
independent qualified professional selected by Lender and may require a
certificate of completion by an independent qualified professional architect
acceptable to Lender prior to the disbursement of Capital Expenditure Funds.
Lender shall pay the expense of the inspection as required hereunder, whether
such inspection is conducted by Lender or by an independent qualified
professional architect.
(f) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with Capital Expenditures Work or
Required Repairs. All such policies shall be in form and amount reasonably
satisfactory to Lender.
(g) In the event Lender releases an Individual Property as a result of
the exercise of Borrower's rights under Section 11.28 or Section 11.29 hereof,
Agent shall, simultaneous to the release of the Liens of the Loan Documents with
respect to such Individual Property, deliver, or cause the delivery, to Borrower
from the Capital Expenditure Funds an amount equal to the Capital Expenditure
Funds deposited by Borrower into the Capital Expenditure Account specifically
with respect to Required Repairs at such Individual Property as set forth on
Schedule II less amounts previously disbursed to Borrower for such Required
Repairs performed at such Individual Property.
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Section 6.5 Borrower Cash Collateral Funds.
6.5.1 Deposits of Borrower Cash Collateral Funds. From and after (a)
the occurrence of an Initial Trigger Event and during the continuance of an
Initial Trigger Period, Borrower shall deposit with Lender fifty percent (50%)
of the Borrower Excess Cash Flow and (b) the occurrence of a Secondary Trigger
Event and during the continuance of a Secondary Trigger Period, Borrower shall
deposit with Lender all of the Borrower Excess Cash Flow (subclauses (a) and (b)
together, the "Borrower Cash Collateral Funds"). Notwithstanding subsections (a)
and (b) above, Borrower shall not be required to deposit Borrower Cash
Collateral Funds which are in excess of the Annual Debt Service Payment Amount.
6.5.2 Release of Borrower Cash Collateral Funds. Provided no Event of
Default shall have occurred and be continuing, all Borrower Cash Collateral
Funds on deposit shall be released to Borrower when neither an Initial Trigger
Period nor a Secondary Trigger Period then exists.
Section 6.6 Operating Company Cash Collateral Funds.
6.6.1 Deposits of Operating Company Cash Collateral Funds. From and
after (a) the occurrence of an Initial Trigger Event and during the continuance
of an Initial Trigger Period, Borrower shall cause Operating Company to deposit
with Lender fifty percent (50%) of the Operating Company Excess Cash Flow and
(b) the occurrence of a Secondary Trigger Event and during the continuance of a
Secondary Trigger Period, Borrower shall cause Operating Company to deposit with
Lender all of the Operating Company Excess Cash Flow (subclauses (a) and (b)
together, the "Operating Company Cash Collateral Funds"). Notwithstanding
subsections (a) and (b) above, Borrower shall not be required to cause Operating
Company to deposit Operating Company Cash Collateral Funds which are in excess
of the Annual Operating Lease Rent Amount.
6.6.2 Release of Operating Company Cash Collateral Funds. Provided no
Event of Default shall have occurred and be continuing, all Operating Company
Cash Collateral Funds on deposit shall be released to Operating Company when
neither an Initial Trigger Period nor a Secondary Trigger Period then exists.
Section 6.7 Debt Service Reserve Funds. On the Closing Date, Borrower
shall deposit with Agent the amount of Seven Million Two Hundred Five Thousand
Three Hundred Thirty Three and 43/100 Dollars ($7,205,333.43) (the "Debt Service
Reserve Funds"). On each anniversary of the Closing Date, the amount of funds
required to be on deposit in the Debt Service Reserve Account (as defined in the
Cash Management Agreement) shall be adjusted so that the amount on deposit in
the Debt Service Reserve shall equal the product of (a) the cumulative total of
the next following twelve (12) months of Debt Service assuming an interest rate
equal to LIBOR as determined in accordance with the terms of this Agreement on
such anniversary date plus five hundred (500) basis points, subject to a maximum
rate of 8.75%, and (b) 33.33% (the "Required Debt Service Reserve Deposit"). If
the amount of Debt Service Reserve Funds on deposit in the Debt Service Reserve
Account on any such anniversary of the Closing Date shall be less than the
amount of the Required Debt Service Reserve Deposit, Borrower shall deposit any
such shortfall in the Debt Service Reserve Account within three (3)
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Business Days of such date. If the amount of Debt Service Reserve Funds on
deposit in the Debt Service Reserve Account on any such anniversary of the
Closing Date shall be greater than the amount of the Required Debt Service
Reserve Deposit, Lender shall direct Agent to disburse such excess amount to or
as directed by the Borrower within three (3) Business Days of such date.
Section 6.8 Application of Reserve Funds.
Upon the occurrence and during the continuance of an Event of Default,
Lender, at its option, may withdraw the Reserve Funds and apply the Reserve
Funds to the items for which the Reserve Funds were established or to payment of
the Debt in such order, proportion and priority as Lender may determine in its
sole discretion. Lender's right to withdraw and apply the Reserve Funds shall be
in addition to all other rights and remedies provided to Lender under the Loan
Documents.
Section 6.9 Security Interest in Reserve Funds.
6.9.1 Grant of Security Interest. Borrower shall be the owner of the
Reserve Funds. Borrower hereby pledges, assigns and grants a security interest
to Lender, as security for payment of the Debt and the performance of all other
terms, conditions and covenants of the Loan Documents on Borrower's part to be
paid and performed, in all of Borrower's right, title and interest in and to the
Reserve Funds. The Reserve Funds shall be under the sole dominion and control of
Lender.
6.9.2 Income Taxes. Borrower shall report on its federal, state and
local income tax returns or shall cause any consolidated federal, state and
local tax returns relating to Borrower to report all interest or income accrued
on the Reserve Funds.
6.9.3 Prohibition Against Further Encumbrance. Borrower shall not,
without the prior consent of Lender, further pledge, assign or grant any
security interest in the Reserve Funds or permit any lien or encumbrance to
attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.
Section 6.10 Letters of Credit.
6.10.1 Delivery of Letters of Credit. (a) In lieu of making the
payments to any one or more of the Reserve Funds, Borrower may from time to time
deliver to Lender a Letter of Credit or amendments thereto in accordance with
the provisions of this Section 6.10. Additionally, Borrower may deliver to
Lender a Letter of Credit in accordance with the provisions of this Section 6.10
in lieu of deposits previously made to the Reserve Funds and, notwithstanding
anything to the contrary contained herein Borrower shall not be required to make
deposits to the relevant Reserve Funds to the extent and during such time as
such amounts are represented by a Letter of Credit delivered in accordance with
this Article VI. The aggregate amount of any Letter of Credit and cash on
deposit with respect to the Capital Expenditure Funds, the Debt Service Reserve
Funds and the Required Repair Funds shall at all times be at least equal to the
aggregate amount which Borrower is required to have on deposit in such Reserve
Fund pursuant to this Agreement. The aggregate amount of any Letter of Credit
and cash on deposit with respect to the Tax Funds shall at all times be at least
equal to the aggregate which Borrower would be required to deposit in such
Reserve Fund over the next twelve (12) month period (such amount to be adjusted
annually on the first (1st) Business Day of each Fiscal Year based on the
amounts required for the payment of Taxes as set forth in the Annual Budget for
such Fiscal Year). The aggregate amount of any Letter of Credit and
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cash on deposit with respect to the Insurance Funds shall at all times be at
least equal to the aggregate which Borrower would be required to deposit in such
Reserve Fund over the next twelve (12) month period (such amount to be adjusted
annually on the first (1st) Business Day of each Fiscal Year based on the
amounts required for the payment of Insurance Premiums as set forth in the
Annual Budget for such Fiscal Year). The aggregate amount of any Letter of
Credit and cash on deposit with respect to the Borrower Cash Collateral Funds
and the Operating Company Cash Collateral Funds shall at all times be at least
equal to the aggregate amount which Borrower has on deposit with respect to the
Borrower Cash Collateral Funds and the Operating Company Cash Collateral Funds
immediately prior to the deliver of such Letter of Credit, but shall in no way
diminish Borrower's and/or Operating Company's obligations, as applicable, to
deposit additional Borrower Cash Collateral Funds and Operating Company Cash
Collateral Funds as required hereunder.
(b) Borrower shall give Lender no less than twenty (20) days notice of
Borrower's election to deliver a Letter of Credit or an amendment to any
outstanding Letter of Credit modifying the amount thereof and Borrower shall pay
to Lender all of Lender's reasonable out-of-pocket costs and expenses in
connection therewith. Borrower shall not be entitled to draw from any such
Letter of Credit. Upon twenty (20) days notice to Lender, Borrower may replace a
Letter of Credit with a cash deposit to the applicable Reserve Fund if a Letter
of Credit has been outstanding for more than six (6) months. Prior to the return
of a Letter of Credit, Borrower shall deposit an amount equal to the amount that
would have accumulated in the applicable Reserve Fund and not been disbursed in
accordance with this Agreement if such Letter of Credit had not been delivered.
(c) Borrower shall provide Lender with notice of any increases in the
annual payments for Taxes and Insurance Premiums on the date Borrower delivers
the Annual Budget to Lender and any applicable Letter of Credit shall be
increased by such increased amount at least ten (10) days prior to the effective
date of such increase.
Section 6.11 Provisions Regarding Letters of Credit.
6.11.1 Security for Debt. Each Letter of Credit delivered under this
Agreement shall be additional security for the payment of the Debt. Upon the
occurrence of an Event of Default, Lender shall have the right, at its option,
to draw on any Letter of Credit and to apply all or any part thereof to the
payment of the items for which such Letter of Credit was established or to apply
each such Letter of Credit to payment of the Debt in such order, proportion or
priority as Lender may determine. Any such application to the Debt shall be
subject to the Yield Maintenance Premium. On the Maturity Date, any such Letter
of Credit may be applied to reduce the Debt unless the Debt has been paid in
full, in which case, any such Letter of Credit shall be returned to or at the
direction of Borrower.
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6.11.2 Additional Rights of Lender. In addition to any other right
Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) with respect to any evergreen Letter of Credit,
if Lender has received a notice from the issuing bank that the Letter of Credit
will not be renewed and a substitute Letter of Credit is not provided at least
thirty (30) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (b) with respect to any Letter of Credit with a stated
expiration date, if Lender has not received a notice from the issuing bank that
it has renewed the Letter of Credit at least thirty (30) days prior to the date
on which such Letter of Credit is scheduled to expire and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (c) upon receipt of notice
from the issuing bank that the Letter of Credit will be terminated (except if
the termination of such Letter of Credit is permitted pursuant to the terms and
conditions of this Agreement or a substitute Letter of Credit is provided); or
(d) if Lender has received notice that the bank issuing the Letter of Credit
shall cease to be an Eligible Institution. Notwithstanding anything to the
contrary contained in the above, Lender is not obligated to draw any Letter of
Credit upon the happening of an event specified in (a), (b), (c) or (d) above
and shall not be liable for any losses sustained by Borrower due to the
insolvency of the bank issuing the Letter of Credit if Lender has not drawn the
Letter of Credit. In the event that Lender draws on any Letter of Credit
relating to Reserve Funds pursuant to this Section 6.11.2, Lender shall deposit
any funds drawn under such Letter of Credit with the applicable Reserve Funds.
Lender shall use commercially reasonable efforts to give Borrower notice that
Lender intends to draw under a Letter of Credit under the circumstances set
forth in this Section 6.11.2, provided that Lender shall have no liability for
its failure to so notify Borrower.
VII. PROPERTY MANAGEMENT
Section 7.1 The Management Agreement.
Borrower shall cause Manager to manage the Property in accordance with
the Management Agreement. Borrower shall cause the Operating Company to (i)
diligently perform and observe all of the terms, covenants and conditions of the
Management Agreement on the part of Operating Company to be performed and
observed, (ii) promptly notify Lender of any notice to Borrower or Operating
Company of any material default by Borrower or Operating Company in the
performance or observance of any of the terms, covenants or conditions of the
Management Agreement on the part of Borrower or Operating Company to be
performed and observed, and (iii) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditures plan, report and
estimate required to be delivered to Operating Company under the Management
Agreement and actually received by either of Borrower or Operating Company. If
Borrower or Operating Company shall default in the performance or observance of
any material term, covenant or condition of the Management Agreement on the part
of Borrower or Operating Company to be performed or observed beyond applicable
notice and grace periods, then, without limiting Lender's other rights or
remedies under this Agreement or the other Loan Documents, and without waiving
or releasing Borrower from any of its obligations hereunder or under the
Management Agreement, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act as may be appropriate to
cause all the material terms,
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covenants and conditions of the Management Agreement on the part of Borrower to
be performed or observed.
Section 7.2 Prohibition Against Termination or Modification.
Borrower shall not surrender, accept surrender, terminate, cancel,
modify, renew or extend the Management Agreement, or enter into any other
agreement relating to the management or operation of the Property with Manager
or any other Person, or consent to the assignment by the Manager of its interest
under the Management Agreement, in each case without (a) the express consent of
Lender and (b) receipt of a Rating Agency Confirmation; provided, however, with
respect to a new manager which is an Affiliate of Borrower, Borrower shall, in
addition, deliver a non-consolidation opinion acceptable to the Lender and the
Rating Agencies. If at any time a new manager is appointed in accordance with
the provisions of this Section 7.2, such new manager and Borrower shall execute
a subordination of management agreement in the form then used by Lender.
Section 7.3 Replacement of Manager.
Lender shall have the right to require Borrower to replace or to cause
Operating Company to replace the Manager with a Person which is not an Affiliate
of, but is chosen by, Borrower and approved by Lender (which approval shall be
conditioned upon receipt of a Rating Agency Confirmation) upon the occurrence of
any one or more of the following events: (i) at any time following the
occurrence and during the continuance of an Event of Default or (ii) if Manager
shall be in material default under the Management Agreement beyond any
applicable notice and cure period.
VIII. PERMITTED TRANSFERS
Section 8.1 Intentionally Omitted.
Section 8.2 Permitted Transfers of Interest in Borrower.
(a) The restrictions on Transfers of ownership interests in the
Borrower set forth in Article 6 of the Mortgage and Section 4.2.1 hereof shall
not apply to any Transfer, from time to time, whether direct or indirect, of the
ownership interests in Borrower or Operating Company to a corporation, limited
partnership or limited liability company provided that (i) Lender shall have
received a Rating Agency Confirmation as to such Transfer to the transferee,
(ii) Lender shall have received a non-consolidation opinion acceptable to Lender
and the Rating Agencies in their sole discretion and (iii) Lender shall have
received such documents, certificates and legal opinions as it may reasonably
request.
(b) The restrictions on Transfers of ownership interests in Borrower
set forth in Article 6 of the Mortgage and Section 4.2.1 hereof shall not apply
to (i) the issuance, sale, transfer or pledge of publicly traded shares of
Guarantor, (ii) the pledge by Guarantor of membership interests in Borrower or
Operating Company for the purpose of securing a general corporate borrowing by
Guarantor, provided that after giving effect to such Transfer and any subsequent
Transfer holders of at least 50.1% of the indebtedness secured by such pledge
are
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Qualified Transferees or (iii) the foreclosure of such pledge and/or subsequent
Transfer of the membership interests of Borrower or Operating Company by
transfer in lieu of foreclosure, provided that after giving effect to such
foreclosure or Transfer and any subsequent Transfer Borrower and Operating
Company are owned by one (1) or more Qualified Transferees or at least 50.1% of
the ownership interests in each of Borrower and Operating Company are held by
Qualified Transferees, and further provided in the case of (ii) and (iii) above,
if after giving effect to such Transfer and all prior Transfers, more than
forty-nine percent (49%) in the aggregate of direct or indirect interests in
Borrower or Operating Company are owned by any Person and its Affiliates that
owned less than a forty-nine percent (49%) direct or indirect interest in
Borrower or Operating Company, as applicable, as of the Closing Date, Lender
receives a non-consolidation opinion acceptable to Lender and the Rating
Agencies. Any loan documents executed in connection with such general corporate
borrowing shall restrict or permit Borrower to restrict (i) the transfer of any
interest in such loan and (ii) the foreclosure of such pledge (or transfer in
lieu thereof), in each case in violation of this Section 8.2(b).
IX. SALE AND SECURITIZATION OF MORTGAGE
Section 9.1 Sale of Mortgage and Securitization.
(a) Lender shall have the right (i) to sell or otherwise transfer the
Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization". Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").
(b) If requested by Lender, Borrower shall assist Lender in satisfying
the market standards to which Lender customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any Secondary Market Transactions, including, without limitation, to:
(i) (A) provide updated financial and other information with respect
to the Property, the business operated at the Property, Borrower and the
Manager, (B) provide updated budgets relating to the Property and (C) provide
updated appraisals, market studies, environmental reviews (Phase I's and, if
appropriate, Phase II's), property condition reports and other due diligence
investigations of the Property (the "Updated Information"), together, if
customary, with appropriate verification of the Updated Information through
letters of auditors or opinions of counsel reasonably acceptable to Lender and
acceptable to the Rating Agencies;
(ii) provide opinions of counsel (or assist Lender in connection with
the preparation of opinions of counsel to the extent Lender's counsel has
prepared or is preparing such opinions), which may be relied upon by Lender, the
Rating Agencies and their respective counsel, agents and representatives, as to
non-consolidation, fraudulent conveyance, and true sale or any other opinion
customary in Secondary Market Transactions or required by the Rating Agencies
with respect to the Property and Borrower and Affiliates, which counsel and
opinions shall be reasonably satisfactory to Lender and satisfactory to the
Rating Agencies;
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(iii) provide updated, as of the closing date of the Secondary Market
Transaction, representations and warranties made in the Loan Documents and such
additional representations and warranties as the Rating Agencies may require
with such modifications as are necessary to make such representations and
warranties true in all material respects; and
(iv) execute amendments to the Loan Documents and Borrower's
organizational documents reasonably requested by Lender; provided, however, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (A) change the interest rate, the stated
maturity or the amortization of principal as set forth herein or in the Note,
(B) modify or amend any other material economic term of the Loan or (C)
materially increase Borrower's obligations and liabilities under the Loan
Documents.
Section 9.2 Securitization Indemnification.
(a) Borrower understands that information provided to Lender by
Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.
(b) Borrower shall provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, an agreement (A)
certifying that Borrower has examined such Disclosure Documents specified by
Lender and that the information contained in the Disclosure Document to the
extent that it relates to any information provided to Lender in writing by or on
behalf of Borrower relating to Borrower, Borrower Affiliates, the Property and
Manager (together, the "Covered Disclosure Information"), does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in the light of the circumstances under
which they were made, not misleading, (B) indemnifying Lender (and for purposes
of this Section 9.2, Lender hereunder shall include its officers and directors),
the Affiliate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ that has filed the registration statement
relating to the Securitization (the "Registration Statement"), each of its
directors, each of its officers who have signed the Registration Statement and
each Person that controls the Affiliate within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "▇▇▇▇▇▇
▇▇▇▇▇▇▇ Group") , and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and any other placement agent or
underwriter with respect to the Securitization, each of their respective
directors and each Person who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or any other placement
agent or underwriter within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act (collectively, the "Underwriter Group") for any
losses, claims, damages or liabilities (collectively, the "Liabilities") to
which Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Covered Disclosure Information or arise out of or are based upon the
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omission or alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the statements in the
Covered Disclosure Information, in light of the circumstances under which they
were made, not misleading and (C) agreeing to reimburse Lender, the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Group and/or the Underwriter Group for any legal or other expenses
reasonably incurred by Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group and the Underwriter
Group in connection with investigating or defending the Liabilities; provided,
however, that Borrower will be liable in any such case under clauses (B) or (C)
above only to the extent that any such loss claim, damage or liability arises
out of or is based upon any such untrue statement or omission made therein in
reliance upon and in conformity with information furnished to Lender by or on
behalf of Borrower in connection with the preparation of the Disclosure Document
or in connection with the underwriting or closing of the Loan, including,
without limitation, financial statements of Borrower, operating statements and
rent rolls with respect to the Property. This indemnity agreement will be in
addition to any liability which Borrower may otherwise have.
(c) In connection with any Disclosure Document or any filing under or
pursuant to the Exchange Act in connection with or relating to a Securitization,
Borrower shall (i) indemnify Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group and the
Underwriter Group for Liabilities to which Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon the omission or alleged omission to state in the Covered
Disclosure Information a material fact required to be stated in the Disclosure
Document in order to make the statements in the Covered Disclosure Information,
in light of the circumstances under which they were made, not misleading and
(ii) reimburse Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group or the Underwriter Group for any
legal or other expenses reasonably incurred by Lender, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
or the Underwriter Group in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this Section
9.2 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party under this Section 9.2, such indemnified party shall pay for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party at
the cost
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of the indemnifying party. The indemnifying party shall not be liable for the
expenses of more than one separate counsel unless an indemnified party shall
have reasonably concluded that there may be legal defenses available to it that
are different from or additional to those available to another indemnified
party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ and Borrower's
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.
(f) The liabilities and obligations of both Borrower and Lender under
this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
(g) Notwithstanding anything to the contrary contained herein,
Borrower shall have no obligation to act as depositor with respect to the Loan
or an issuer or registrant with respect to any Securities issued in any
Securitization.
Section 9.3 Rating Surveillance.
Borrower will retain the Rating Agencies to provide rating
surveillance services on any certificates issued in a Securitization. Such
rating surveillance will be at the expense of Borrower in an amount determined
by Lender in its reasonable discretion prior to the occurrence of a
Securitization (the "Rating Surveillance Charge").
Section 9.4 Trustee, Accounting and Other Fees.
Borrower shall be responsible for the payment of any and all set up
and ongoing fees associated with any Trustee and, in connection with any
Securitization of the Loan, for any fees, costs and expenses incurred in
connection with any initial and ongoing accounting or auditing activities
conducted with respect to the Loan. Such ongoing fees associated with any
Trustee for which the Borrower is responsible shall be calculated and be payable
on the same basis and terms (other than the rate) on which the interest payable
hereunder is calculated and payable; the Borrower's obligation to pay same shall
be secured by the Mortgage; and all references herein (including without
limitation Section 10.1), in the Mortgage or in any other Loan Document to
interest payable by the Borrower shall be construed to also refer to such
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ongoing fees associated with any Trustee for which the Borrower is responsible.
Without limiting the generality of any obligation hereunder, following any
Securitization, any obligation of any Person to pay (or any condition to the
effect that such payment must be made) the fees and expenses of the Lender shall
be construed to also refer to the out-of-pocket fees and expenses of the
Servicer and the Trustee.
X. DEFAULTS
Section 10.1 Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (an "Event of Default"):
(i) if (A) any monthly installment of principal and/or interest due
under the Note or the payment due on the Maturity Date is not paid when due or
(B) any other portion of the Debt is not paid when due and such non-payment
continues for ten (10) days following notice to Borrower that the same is due
and payable;
(ii) if any of the Taxes or Other Charges are not paid prior to the
date when the same become delinquent, unless Borrower is contesting such Taxes
or Other Charges in accordance with the provisions of Section 4.1.2 hereof;
(iii) if the Policies are not kept in full force and effect;
(iv) if Borrower breaches or permits or suffers a breach of Article 6
of the Mortgage;
(v) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial statement or
other instrument, agreement or document furnished to Lender shall have been
false or misleading in any material respect as of the date the representation or
warranty was made;
(vi) if Borrower, Operating Company or Guarantor shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, Operating Company or Guarantor or if Borrower, Operating Company or
Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, Operating Company or Guarantor, or if any proceeding
for the dissolution or liquidation of Borrower, Operating Company or Guarantor
shall be instituted; provided, however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower,
Operating Company or Guarantor, upon the same not being discharged, stayed or
dismissed within sixty (60) days;
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(viii) if Borrower attempts to assign its rights under this Agreement
or any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;
(ix) if any of the assumptions contained in the Insolvency Opinion, or
in any other non-consolidation opinion delivered to Lender in connection with
the Loan, or in any other non-consolidation delivered subsequent to the closing
of the Loan, is or shall become untrue in any material respect;
(x) if Borrower breaches any representation, warranty or covenant
contained in Section 3.1.24 hereof;
(xi) if Borrower fails to comply with the covenants as to Prescribed
Laws set forth in Section 4.1.1;
(xii) if Borrower breaches any of the negative covenants contained in
Sections 4.2.12, 4.2.13, 4.2.14 or 4.2.15 hereof or acts or neglects to act in
such a manner as to be considered a default under the Operating Agreements;
(xiii) if Borrower fails to maintain an Interest Rate Protection
Agreement pursuant to Section 4.1.11 hereof;
(xiv) if Borrower or Operating Company is in default of any of its
material obligations under the Operating Lease beyond any applicable notice and
cure periods contained therein;
(xv) if Guarantor breaches in any material respect any covenant,
warranty or representation contained in the Guaranty, provided, however, if such
breach is capable of being cured, Guarantor shall have the right to cure such
breach within thirty (30) days of receipt of notice from Lender;
(xvi) if Operating Company or Manager is in default of any of material
its obligations under the Management Agreement beyond any applicable notice and
cure periods contained therein; or
(xvii) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or the provisions of any
of the other Loan Documents not specified in subsections (i) to (xvi) above, for
ten (10) days after notice to Borrower from Lender, in the case of any Default
which can be cured by the payment of a sum of money, or for thirty (30) days
after notice from Lender in the case of any other Default; provided, however,
that if such non-monetary Default is susceptible of cure but cannot reasonably
be cured within such 30-day period and provided further that Borrower shall have
commenced to cure such Default within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period shall
be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not to
exceed sixty (60) days plus time permitted for Excusable Delays.
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(b) Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default described in clauses (vi), (vii) or
(viii) above) and at any time thereafter Lender may, in addition to any other
rights or remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, take such action, without notice or demand,
that Lender deems advisable to protect and enforce its rights against Borrower
and in and to the Property, including, without limitation, declaring the Debt to
be immediately due and payable, and Lender may enforce or avail itself of any or
all rights or remedies provided in the Loan Documents against Borrower and the
Property, including, without limitation, all rights or remedies available at law
or in equity; and upon any Event of Default described in clauses (vi), (vii) or
(viii) above, the Debt and all other obligations of Borrower hereunder and under
the other Loan Documents shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
Section 10.2 Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under this Agreement or any of the
other Loan Documents executed and delivered by, or applicable to, Borrower or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to the Property. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. To the extent permitted by applicable law, without limiting the
generality of the foregoing, if an Event of Default is continuing (i) Lender is
not subject to any "one action" or "election of remedies" law or rule, and (ii)
all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Property and the Mortgage has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b) To the extent permitted by applicable law, Lender shall have the
right from time to time to partially foreclose the Mortgage in any manner and
for any amounts secured by the Mortgage then due and payable as determined by
Lender in its sole discretion including, without limitation, the following
circumstances: (i) in the event Borrower defaults beyond any applicable grace
period in the payment of one or more scheduled payments of principal and
interest, Lender may foreclose the Mortgage to recover such delinquent payments,
or (ii) in the event Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Lender may foreclose the Mortgage to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by the Mortgage as Lender may elect. Notwithstanding
one or more partial foreclosures, the Property shall remain subject to the
Mortgage to secure payment of sums secured by the Mortgage and not previously
recovered.
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(c) Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall reasonably request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Lender. Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) Business
Days after notice has been given to Borrower by Lender of Lender's intent to
exercise its rights under such power. Except as may be required in connection
with a Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, (ii)
the Severed Loan Documents shall not contain any representations, warranties or
covenants not contained in the Loan Documents and any such representations and
warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date and (iii) the Severed Loan Documents shall not
otherwise in the reasonable judgment of Borrower modify or amend any economic
term of the Loan or materially increase Borrower's obligations and liabilities
under the Loan.
(d) Any amounts recovered from the Property or any other collateral
for the Loan after an Event of Default may be applied by Lender toward the
payment of any interest and/or principal of the Loan and/or any other amounts
due under the Loan Documents in such order, priority and proportions as Lender
in its sole discretion shall determine.
Section 10.3 Right to Cure Defaults.
Upon the occurrence and during the continuance of a 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 or being
deemed to have cured any Event of Default hereunder, make, do or perform any
obligation of Borrower hereunder in such manner and to such extent as Lender may
deem necessary. Lender is authorized to enter upon the Property for such
purposes, or appear in, defend, or bring any action or proceeding to protect its
interest in the Property for such purposes, and the cost and expense thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this Section 10.3, shall constitute a portion of the
Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender in remedying such Event of Default or such failed
payment or act or in appearing in, defending, or bringing any action or
proceeding shall bear interest at the Default Rate, for the period after such
cost or expense was incurred into the date of payment to Lender. All such costs
and expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by the liens, claims and security interests provided to Lender under the Loan
Documents and shall be immediately due and payable on the date which is ten (10)
days after notice of demand is received by Borrower from Lender therefore.
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Section 10.4 Remedies Cumulative.
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.
XI. MISCELLANEOUS
Section 11.1 Successors and Assigns.
All covenants, promises and agreements in this Agreement, by or on
behalf of either party, shall inure to the benefit of the legal representatives,
successors and assigns of such party.
Section 11.2 Lender's Discretion.
Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.
Section 11.3 Governing Law.
(A) THIS AGREEMENT WAS EXECUTED BY LENDER AND BORROWER IN THE STATE OF
NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED
FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
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ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE (WITHOUT REGARD OT PRINCIPLES OF CONFLICT OF LAWS
OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND SECTION
1-105(2) OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) AND ANY APPLICABLE
LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR
THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN
WITH RESPECT TO LIENS AND SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND
PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE
ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION APPLICABLE
THERETO IN ACCORDANCE WITH SECTIONS 9-301 THROUGH 9-307 OF THE UCC AS IN EFFECT
IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE
LAW OF THE STATE IN WHICH EACH INDIVIDUAL PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CT CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
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DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.
Section 11.4 Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 11.5 Delay Not a Waiver.
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under any other
Loan Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement or any other Loan Document, Lender shall not be
deemed to have waived any right either to require prompt payment when due of all
other amounts due under this Agreement or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Lender shall have the right to waive or reduce any time periods that Lender is
entitled to under the Loan Documents in its sole and absolute discretion.
Section 11.6 Notices.
All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with
electronic confirmation of receipt) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or reputable overnight
courier addressed to the party to be so notified at its address hereinafter set
forth, or to such other address as such party may hereafter specify in
accordance with the provisions of this Section 11.6. Any Notice shall be deemed
to have been received: (a) three (3) days after the date such Notice is mailed,
(b) on the date of sending by telefax if sent during business hours on a
Business Day (otherwise on the next Business Day), (c) on the date of delivery
by hand if delivered during
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business hours on a Business Day (otherwise on the next Business Day), and (d)
on the next Business Day if sent by an overnight commercial courier, in each
case addressed to the parties as follows::
If to Lender: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
1221 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: KC Propco, LLC
c/o KinderCare Learning Centers, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.7 Trial by Jury.
BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE.
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EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 11.8 Headings.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 11.9 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 11.10 Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section 11.11 Waiver of Notice.
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 11.12 Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
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whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment.
Section 11.13 Expenses; Indemnity.
(a) Except as otherwise provided herein, Borrower shall pay or, if
Borrower fails to pay, reimburse Lender upon receipt of notice from Lender, for
all reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) Borrower's ongoing
performance of and compliance with Borrower's agreements and covenants contained
in this Agreement and the other Loan Documents, and/or the satisfaction of any
conditions set forth in this Agreement or the other Loan Documents to the
exercise of any right granted to Borrower herein or therein, on its part to be
performed or complied with or satisfied after the Closing Date, including,
without limitation, confirming compliance with environmental and insurance
requirements; (ii) Lender's ongoing performance of and compliance with all
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iii) 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; (iv) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred, in creating and perfecting
the Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (v) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation or otherwise, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents, the Property, or any other security given
for the Loan; and (vi) enforcing any obligations of or collecting any payments
due from Borrower under this Agreement, the other Loan Documents or with respect
to the Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any costs due and payable to Lender may be paid to Lender
pursuant to the Cash Management Agreement.
(b) Borrower shall indemnify, defend and hold harmless Lender and its
officers, directors, agents, employees (and the successors and assigns of the
foregoing) (the "Lender Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for the
Lender Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not the Lender
Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against the Lender Indemnitees in any manner relating
to or arising out of (i) any breach by Borrower of its obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to the Lender Indemnitees hereunder to the extent
that such Indemnified
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Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of the Lender Indemnitees. To the extent that the undertaking to
indemnify, defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by the
Lender Indemnitees.
Section 11.14 Schedules Incorporated.
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
Section 11.15 Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 11.17 Publicity.
Subject to the terms and provisions of Article IX hereof, all news
releases, publicity or advertising by each of Lender or Borrower or their
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing
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evidenced by the Loan Documents, to Lender, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital
Inc., or any of their Affiliates shall be subject to the prior approval of
Lender and Borrower, or where only one party or its Affiliates are mentioned,
then the prior approval of the other party. Section 11.18 Cross-Default;
Cross-Collateralization; Waiver of Marshalling of Assets.
(a) Borrower acknowledges that Lender has made the Loan to Borrower
upon the security of its collective interest in the Property and in reliance
upon the aggregate of the Individual Properties taken together being of greater
value as collateral security than the sum of such Property taken separately.
Borrower agrees that each Mortgage creates a single blanket Lien encumbering all
of the Property so that (i) an Event of Default under any Mortgage with respect
to any Individual Property constitutes an Event of Default under every Mortgage
with respect to all of the Property and (ii) an Event of Default under the Note
or this Loan Agreement shall constitute an Event of Default under each Mortgage.
(b) To the fullest extent permitted by law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Property, and shall not assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever. In addition and in the event of foreclosure of
any Mortgage, Borrower, for itself and its successors and assigns, waives any
equitable right otherwise available to Borrower which would require the separate
sale of any Individual Property or require Lender to exhaust its remedies
against any Individual Property, or any combination thereof, before proceeding
against any other Individual Property or portion thereof; and, further, in the
event of such foreclosure Borrower does hereby expressly consent to and
authorizes, at the option of Lender, the foreclosure and sale either separately
or together of any combination of the Individual Properties.
Section 11.19 Waiver of Offsets/Defenses/Counterclaims.
Nothing contained in this Agreement and no act done or omitted by
Lender pursuant to the power and rights granted to Lender hereunder shall be
deemed to be a waiver by Lender of its rights and remedies under this Agreement,
the Note, or the other Loan Documents and this Agreement is made and accepted
without prejudice to any of the rights and remedies possessed by Lender under
the terms thereof. Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or its agents or otherwise to offset any obligations to
make the payments required by the Loan Documents. No failure by Lender to
perform any of its obligations hereunder shall be a valid defense to, or result
in any offset against, any payments which Borrower is obligated to make under
any of the Loan Documents.
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Section 11.20 Conflict; Construction of Documents; Reliance.
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
Section 11.21 Brokers and Financial Advisors.
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower shall
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender's attorneys' fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 11.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.
Section 11.22 Exculpation.
Subject to the qualifications below, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgage or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgage and the other Loan Documents, or in the Property, the Rents, or any
other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender, and Lender, by accepting the Note, this Agreement, the Mortgage
and the other Loan Documents, shall not ▇▇▇ for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding under or by reason of
or under or in connection with the Note, this Agreement, the Mortgage or the
other Loan Documents. The provisions of this Section shall not,
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however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (c) affect the validity or
enforceability of any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of the
Assignment of Leases; (f) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower solely in order to fully realize on any
security given by Borrower in connection with the Loan or to commence any other
appropriate action or proceeding in order for Lender to exercise its remedies
against such security; or (g) constitute a waiver of the right of Lender to
enforce the liability and obligation of Borrower, by money judgment or
otherwise, to the extent of any loss, damage, cost, expense, liability, claim or
other obligation incurred by Lender (including attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower or any
guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the Mortgage
concerning environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto in either document;
(iv) the removal or disposal of any portion of the Property after an
Event of Default;
(v) the misapplication or conversion by Borrower of (A) any insurance
proceeds paid by reason of any loss, damage or destruction to the Property, (B)
any Awards or other amounts received in connection with the Condemnation of all
or a portion of the Property, or (C) any Rents following an Event of Default;
(vi) any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender upon a
foreclosure of the Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; and
(vii) Borrower's indemnification of Lender set forth in Section 9.2
hereof.
Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) Borrower fails to obtain
Lender's prior consent to any subordinate financing or other voluntary Lien
encumbering the Property; (ii) Borrower fails to obtain Lender's prior consent
to any assignment, transfer, or conveyance of
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the Property or any interest therein as required by the Mortgage or this
Agreement; (iii) Borrower files a voluntary petition under the Bankruptcy code
or any other Federal or state bankruptcy or insolvency law; (iv) an Affiliate,
officer, director, or representative which controls, directly or indirectly,
Borrower files, or joins in the filing of, an involuntary petition against
Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law, or solicits or causes to be solicited petitioning creditors for
any involuntary petition against Borrower from any Person; (v) Borrower files an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against it, by any other Person under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any Person;
(vi) any Affiliate, officer, director, or representative which controls Borrower
consents to or acquiesces in or joins in an application for the appointment of a
custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; or (vii) Borrower makes an assignment for the benefit of creditors, or
admits, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due. Section 11.23 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, without limitation, the Commitment
Letter dated March 28, 2003 between KinderCare Learning Centers, Inc. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc., are superseded by the terms of this Agreement and
the other Loan Documents.
Section 11.24 Servicer.
(a) At the option of Lender, the Loan may be serviced by a servicer
(the "Servicer") selected by Lender and Lender may delegate all or any portion
of its responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. In soliciting prospective parties to act as Servicer,
Lender shall obtain servicing fee quotes from at least three (3) such
prospective servicers on a competitive bases and shall consult with Borrower on
a regular basis during such solicitation and selection process; provided,
however, that following any Securitization, if the then Servicer is terminated,
whether by resignation, removal for cause or a permitted assignment of the
servicing rights, Lender need not obtain quotes or consult with Borrower
regarding the successor Servicer. Borrower shall be responsible for any
reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement. In addition, Borrower shall be responsible for payment
of the monthly servicing fee due to the Servicer under the Servicing Agreement;
provided that Borrower shall only be responsible to pay for monthly servicing
fees due to the Servicer to the extent of four (4) basis points per annum based
on the outstanding principal amount of the Loan at the beginning of each year in
which the Servicing Agreement is in effect. Such monthly servicing fee for which
the Borrower is responsible shall be calculated and be payable on the same basis
and terms (other than the rate) on which the interest payable hereunder is
calculated and payable; the Borrower's obligation to pay same shall be secured
by the Mortgage; and all references herein (including without limitation Section
10.1), in the Mortgage or in any other Loan Document to interest payable by
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the Borrower shall be construed to also refer to such monthly servicing fee for
which the Borrower is responsible. In addition, Servicer shall be entitled to
reimbursement of costs and expenses as and to the same extent (but without
duplication) as Lender is entitled thereto under the applicable provisions of
this Agreement and the other Loan Documents.
(b) From and after notice from Lender to Borrower of the appointment
of a Servicer, Servicer shall have the right to exercise all rights of Lender
and enforce all obligations of Borrower pursuant to the provisions of this
Agreement, the Note and the other Loan Documents.
(c) Provided Borrower shall have been given notice of Servicer's
address by Lender, Borrower shall deliver to Servicer duplicate originals of all
notices and other instruments which Borrower may or shall be required to deliver
to Lender pursuant to this Agreement, the Note and the other Loan Documents (and
no deliver of such notices or other instruments by Borrower shall be of any
force or effect unless delivered to Lender and Servicer as provided above).
Section 11.25 Joint and Several Liability.
If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.
Section 11.26 Creation of Security Interest.
Notwithstanding any other provision set forth in this Agreement, the
Note, the Mortgage or any of the other Loan Documents, Lender may at any time
create a security interest in all or any portion of its rights under this
Agreement, the Note, the Mortgage and any other Loan Document (including,
without limitation, the advances owing to it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
Section 11.27 Assignments and Participations.
(a) The Lender may assign to one or more Persons all or a portion of
its rights and obligations under this Loan Agreement.
(b) Subject to acceptance and recording thereof pursuant to paragraph
(c) of this Section 11.27, from and after the effective date specified in any
applicable assignment documentation regarding the Loan, the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
documentation, have the rights and obligations of a Lender under this Agreement.
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 11.27 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation of such
rights and obligations in accordance with paragraph (e) of this Section 11.27.
(c) The Borrower or an agent of the Borrower shall maintain a register
(the "Register") on which it will record the Loans made hereunder, and each
Assignment and
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Acceptance and participation. The Register shall include the names and addresses
of the Lenders (including all assignees, successors and participants), and the
Commitment of, and principal amount of the Loans owing to each such Lender.
Failure to make any such recordation, or any error in such recordation shall not
affect the Borrower's obligations in respect of such Loans. If the Lender sells
a participation in any Loan, it shall provide the Borrower, or maintain as agent
of the Borrower, the information described in this paragraph and permit the
Borrower to review such information as reasonably needed for the Borrower to
comply with its obligations under this Agreement or under any applicable law or
governmental regulation or procedure. Absent failure by the Borrower to record
the names and addresses of the Lenders, or any error in such recordation, the
entries in the Register shall be conclusive, and the Borrower and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement.
(d) A participant shall not be entitled to the benefits of Section 2.5
hereof unless the Borrower is notified of the participation sold to such
participant and such participant agrees, for the benefit of Borrower, to comply
with Section 2.5 as though it were a Lender.
(e) Lender may sell participations to one or more Persons in or to all
or a portion of its rights and obligations under this Loan Agreement; provided,
however, that (i) Lender's obligations under this Loan Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (ii) Lender shall remain the
holder of any Note for all purposes of this Loan Agreement and (iv) Borrower
shall continue to deal solely and directly with Lender in connection with
Lender's rights and obligations under and in respect of this Loan Agreement and
the other Loan Documents.
(f) Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.27, disclose to
the assignee or participant or proposed assignee or participant, as the case may
be, any information relating to Borrower or any of its Affiliates or to any
aspect of the Loan that has been furnished to the Lender by or on behalf of the
Borrower or any of its Affiliates.
Section 11.28 Property Releases.
From and after the Permitted Prepayment Date, Borrower may obtain the
release of any Individual Property (such Individual Property shall be referred
to as the "Release Property") from the lien of the applicable Mortgage and
related Loan Documents upon the satisfaction of each of the following
conditions:
(a) Immediately prior to, and after giving effect to, the proposed
release, no Event of Default shall have occurred and be continuing (unless the
Default would be cured by the release of the Release Property).
(b) Lender receives notice thereof at least thirty (30) days before
the date of the proposed release (the "Release Date");
(c) Lender shall have received (i) payment of an amount (the "Release
Amount") equal to one hundred fifteen percent (115%) of the Allocated Loan
Amount of the
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applicable Release Property or such greater amount such that the condition set
forth in Section 11.28(d) shall be satisfied and (ii) payment of any reasonable
expenses incurred by Lender in connection with such release (including, without
limitation, reasonable attorneys' fees).
(d) The Debt Service Coverage Ratio after giving effect to such
release shall be at least equal to the greater of (i) the Debt Service Coverage
Ratio immediately prior to such release and (ii) 2.95:1.0.
(e) The Release Amount of the Release Property, when taken together
with the Release Amount of each other Individual Property released from the Lien
of the Mortgage pursuant to this Section 11.28 and the Casualty Release Amount
of each Individual Property released from the Lien of the Mortgage pursuant to
Section 2.4.2 in the same Loan Year, shall not exceed Fifteen Million and No/100
Dollars ($15,000,000.00).
(f) Borrower shall submit to Lender, not less than five (5) Business
Days prior to the date of such release, a partial release of the applicable
Mortgage as it relates to the Release Property and related Loan Documents for
execution by Lender. Such release shall be in a form appropriate for the
jurisdiction in which the Release Property is located. In addition, Borrower
shall provide such opinions and other documentation as Lender reasonably
requires to be delivered by Borrower in connection with such release provided
the delivery of such opinions and documentation is customary in the relevant
jurisdiction.
(g) Simultaneously with the release, Borrower shall convey fee simple
title to the Release Property to a Person other than Borrower and Borrower and
Operating Company shall execute (i) an amendment to the Operating Lease
effective as of the Release Date deleting the Release Property from the list of
Individual Properties (as defined in the Operating Lease) on Schedule 1 to the
Operating Lease and (ii) an amendment to the Management Agreement effective as
of the Release Date deleting the Release Property from the list of Facilities
(as defined in the Management Agreement).
Section 11.29 Property Substitutions.
11.29.1 Conditions to Substitution. At any time during the term of the
Loan, subject to the terms and conditions set forth in this Section 11.29,
Borrower may obtain from time to time a partial release of the Lien of the
applicable Mortgage and the related Loan Documents encumbering an Individual
Property (each, a "Substituted Property" and collectively, the "Substituted
Properties") by substituting therefor one or more properties (collectively, a
"Substitute Property") of comparable or greater value to that of the Substituted
Property on the Closing Date. Any such substitution shall be subject, in each
case, to the satisfaction of the following conditions precedent:
(a) Simultaneously with the substitution, Borrower shall convey fee
simple title to the Substituted Property to a Person other than Borrower.
(b) Lender shall have received an appraisal of the Substitute Property
dated no more than sixty (60) days prior to the substitution by an appraiser
acceptable to the Rating Agencies, indicating an appraised value of the
Substitute Property that is equal to or greater than the value of the
Substituted Property determined by Lender at or about the Closing Date.
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(c) Immediately after giving effect to the substitution, the Debt
Service Coverage Ratio is not less than the Debt Service Coverage Ratio for the
Loan as of the date immediately preceding the substitution.
(d) Lender shall have received a Rating Agency Confirmation and, if a
Securitization of the Loan has not occurred, Lender shall have approved the
Substitute Property in its sole discretion.
(e) No Default or Event of Default shall have occurred and be
continuing. Lender shall have received an Officer's Certificate in form and
substance satisfactory to the Rating Agencies confirming the foregoing, stating
that the representations and warranties of Borrower contained in this Agreement
and the other Loan Documents including, without limitation, the representations
and warranties set forth in Section 3.1 of this Agreement, are true and correct
in all material respects on and as of the date of the substitution with respect
to Borrower, the Individual Properties and the Substitute Property and
containing any other representations and warranties with respect to Borrower,
the Substitute Property or the Loan as the Rating Agencies may require and as
are customary in property substitutions similar to the substitution of the
Substitute Property for the Substituted Property in connection with lending
transactions similar to the Loan and as are consistent with the facts covered by
such representations and warranties as they exist as of the date thereof, which
representations and warranties shall survive for so long as any amount remains
payable to Lender under this Agreement or any of the other Loan Documents, it
being understood, however, that such representations and warranties shall have
been made only as of the date of the substitution.
(f) Borrower shall have executed, acknowledged and delivered to Lender
(i) a Mortgage, an Assignment of Leases and UCC Financing Statements for
jurisdictions requested by Lender with respect to the Substitute Property,
together with a letter from Borrower countersigned by a title insurance company
acknowledging receipt of such Mortgage, Assignment of Leases and UCC Financing
Statements and agreeing to record or file, as applicable, such Mortgage,
Assignment of Leases and Rents and UCC Financing Statements as directed, so as
to effectively create upon such recording and filing valid and enforceable Liens
upon the Substitute Property, of the requisite priority, in favor of Lender (or
such other trustee as may be desired under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents, (ii) an Environmental Indemnity with respect to the Substitute
Property, and (iii) such amendments to the Loan Documents as may be required in
order to evidence the substitution. The Mortgage, Assignment of Leases, UCC
Financing Statements and Environmental Indemnity shall be the same in form and
substance as the counterparts of such documents executed and delivered in
connection with the closing of the Loan subject to modifications reflecting the
Substitute Property as the Individual Property that is the subject of such
documents and such modifications reflecting the laws of the state in which the
Substitute Property is located as shall be recommended by the counsel admitted
to practice in such state and delivering the opinion as to the enforceability of
such documents required pursuant to clause (n) below. The Mortgage encumbering
the Substitute Property shall secure all amounts evidenced by the Note, provided
that in the event that the jurisdiction in which the Substitute Property is
located imposes a mortgage recording, intangibles or similar tax and does not
permit the allocation of indebtedness for the purpose of determining the amount
of such tax payable, the principal amount secured by such Mortgage shall be
equal to one hundred twenty
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five percent (125%) of the amount of the Loan allocated to the Substitute
Property. The amount of the Loan allocated to, and the Allocated Loan Amount of,
the Substitute Property (such amount being hereinafter referred to as the
"Substitute Allocated Loan Amount") shall equal the Allocated Loan Amount of the
related Substituted Property.
(g) Lender shall have received (i) a "tie-in" or similar endorsement
to each Title Insurance Policy insuring the Lien of an existing Mortgage
evidencing the substitution of the Substitute Property for the Substituted
Property, to the extent such endorsements are available in the related
jurisdictions, and (ii) a Title Insurance Policy (or a marked, signed and
redated commitment to issue such Title Insurance Policy) insuring the Lien of
the Mortgage encumbering the Substitute Property, issued by one of the title
companies that issued the Title Insurance Policy insuring the Lien of the
existing Mortgage and dated as of the date of the substitution. The Title
Insurance Policy issued with respect to the Substitute Property shall (A)
provide coverage in the amount of the Substitute Allocated Loan Amount if the
"tie-in" or similar endorsement described above is available or, if such
endorsement is not available, in an amount equal to one hundred twenty five
percent (125%) of the Substitute Allocated Loan Amount, (B) insure Lender that
the relevant Mortgage creates a valid first lien on fee estate of the Substitute
Property, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (C) contain such endorsements and affirmative
coverages as are contained in the Title Insurance Policy insuring the Lien of
the existing Mortgage to the extent available in the relevant jurisidiction, and
(D) name Lender as the insured. Lender also shall have received copies of paid
receipts or other evidence acceptable to Lender showing that all premiums in
respect of such endorsements and Title Insurance Policies have been paid.
(h) Lender shall have received (i) an endorsement to the Title
Insurance Policy insuring the Lien of the Mortgage encumbering the Substitute
Property insuring that the Substitute Property constitutes a separate tax lot
or, if such an endorsement is not available in the state in which the Substitute
Property is located, a letter from the title insurance company issuing such
Title Insurance Policy stating that the Substitute Property constitutes a
separate tax lot, (ii) a letter from the appropriate Governmental Authority
stating that the Substitute Property constitutes a separate tax lot or (iii)
copies of tax assessments from the appropriate taxing authority demonstrating
that the Substitute Property constitutes a separate tax lot.
(i) Lender shall have received a current boundary survey for each
Substitute Property, certified to the title company and Lender and their
successors and assigns, in the same form and having the same content as the
certification of the Survey of the Substituted Property prepared by a
professional land surveyor licensed in the state in which the Substitute
Property is located and acceptable to the Rating Agencies in accordance with the
1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such
survey shall reflect the same legal description contained in the Title Insurance
Policy relating to such Substitute Property and shall include, among other
things, a metes and bounds description of the real property comprising part of
such Substitute Property or other type of real property description (e.g., block
and lot) that is customarily used in the jurisdiction in which the Substitute
Property is located. In addition, the Lender shall have received a flood zone
certification with respect to the Substitute Property from a company regularly
engaged in the business of providing such flood zone certifications (and, if
such flood zone certification states that the Substitute Property is located in
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a "one-hundred year flood hazard area", such Substitute Property shall be
covered by flood insurance meeting the requirements set forth in Section
5.1.1(a)(i) hereof).
(j) Lender shall have received valid certificates of insurance
indicating that the requirements for the Policies required for an Individual
Property hereunder have been satisfied with respect to the Substitute Property
and evidence of the payment of all premiums payable for the existing policy
period.
(k) Lender shall have received a Phase I environmental report and, if
recommended under the Phase I environmental report, a Phase II environmental
report, which conclude that the Substitute Property does not contain any
Hazardous Substance (as defined in the Environmental Indemnity) and is not
subject to any known risk of contamination from any off-site Hazardous
Substance. If any such report discloses the presence of any Hazardous Substance
or the risk of contamination from any off-site Hazardous Substance, a
substitution shall not be allowed with respect to such proposed Substitute
Property at any time prior to a Securitization. If, subsequent to a
Securitization, any such report discloses the presence of any Hazardous
Substance or the risk of contamination from any off-site Hazardous Substance,
such report shall include an estimate of the cost of any related remediation
required to be undertaken by an environmental consultant selected by Lender and
Borrower shall deposit with Lender an amount equal to one hundred twenty-five
percent (125%) of such estimated cost, which deposit shall constitute additional
security for the Loan and shall be released to Borrower upon the delivery to
Lender of (i) an update to such report indicating that there is no longer any
Hazardous Substance on the Substitute Property or any known danger of
contamination from any off-site Hazardous Substance that has not been fully
remediated and (ii) a certificate from Borrower stating that all such
remediation work has been paid in full.
(l) Lender shall have received a Physical Conditions Report with
respect to the Substitute Property stating that the Substitute Property and its
use comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of material
damage or waste. If compliance with any Legal Requirements are not addressed by
the Physical Conditions Report, such compliance shall be confirmed by delivery
to Lender of a legal compliance report in form and substance, and from a
company, reasonably satisfactory to Lender. If the Physical Conditions Report
recommends that any immediate repairs be made with respect to the Substitute
Property, a substitution shall not be allowed with respect to such proposed
Substitute Property at any time prior to a Securitization. If, subsequent to a
Securitization, any such Physical Conditions Report recommends that any
immediate repairs be made with respect to the Substitute Property, such report
shall include an estimate of the cost of such recommended repairs and Borrower
shall deposit with Lender an amount equal to one hundred twenty-five percent
(125%) of such estimated cost, which deposit shall constitute additional
security for the Loan and shall be released to Borrower upon the delivery to
Lender of (i) an update to such Physical Conditions Report or a letter from the
engineer that prepared such Physical Conditions Report indicating that the
recommended repairs were completed in good and workmanlike manner and (ii) paid
receipts indicating that the costs of all such repairs have been paid.
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(m) Borrower shall deliver or cause to be delivered to Lender (i)
updates certified by Borrower of all organizational documentation related to
Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business delivered to Lender in connection with the Closing
Date; (ii) good standing certificates, certificates of qualification to do
business in the jurisdiction in which the Substitute Property is located and
(iii) resolutions of the Borrower authorizing the substitution and any actions
taken in connection with such substitution.
(n) Lender shall have received the following opinions of Borrower's
counsel: (i) an opinion or opinions of counsel admitted to practice under the
laws of the state in which the Substitute Property is located stating that the
Loan Documents delivered with respect to the Substitute Property pursuant to
clause (f) above are valid and enforceable in accordance with their terms,
subject to the laws applicable to creditors' rights and equitable principles,
and that Borrower is qualified to do business and in good standing under the
laws of the jurisdiction where the Substitute Property is located or that
Borrower is not required by applicable law to qualify to do business in such
jurisdiction; (ii) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or such other
counsel acceptable to the Rating Agencies stating that the Loan Documents
delivered with respect to the Substitute Property pursuant to clause (f) above
were duly authorized, executed and delivered by Borrower and that the execution
and delivery of such Loan Documents and the performance by Borrower of its
obligations thereunder will not cause a breach of, or a default under, any
agreement, document or instrument to which Borrower is a party or to which it or
its properties are bound; (iii) an opinion of Borrower's counsel acceptable to
the Rating Agencies stating that subjecting the Substitute Property to the Lien
of the related Mortgage and the execution and delivery of the related Loan
Documents does not and will not affect or impair the ability of Lender to
enforce its remedies under all of the Loan Documents or to realize the benefits
of the cross-collateralization provided for thereunder; and (iv) an opinion of
counsel acceptable to the Rating Agencies that the substitution does not
constitute a "significant modification" of the Loan under Section 1001 of the
Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any
REMIC Trust.
(o) Borrower shall have paid or created adequate reserves for payment
of all Basic Carrying Costs relating to the Individual Properties and the
Substitute Property through the date of substitution, including without
limitation, (i) accrued but unpaid insurance premiums relating to the Individual
Properties and the Substitute Property, (ii) currently due Taxes (including any
in arrears) relating to the Individual Properties and the Substitute Property
and (iii) currently due Other Charges relating to the Individual Properties and
Substitute Property.
(p) Borrower shall have paid or reimbursed Lender for all reasonable
out-of-pocket costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in connection with the
substitution and Borrower shall have paid all recording charges, filing fees,
taxes or other expenses (including, without limitation, mortgage and intangibles
taxes and documentary stamp taxes) payable in connection with the substitution.
Borrower shall have paid all costs and expenses and fees of the Rating Agencies
and the Servicer incurred in connection with the substitution.
(q) Lender shall have received annual operating statements for the
Substitute Property for the three (3) years immediately prior to the date of
substitution (or such lesser time
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as the Substitute Property has had operations under the management of the
Borrower or an Affiliate of the Borrower except to the extent such statements
for prior periods have been made available to Borrower or an Affiliate of
Borrower), and financial statements for the most current completed Fiscal Year
and a current operating statement for the Substituted Property, each certified
to Lender as being true and correct and a certificate from Borrower certifying
that there has been no material adverse change in the financial condition of the
Substitute Property since the date of such operating statements.
(r) Borrower shall have delivered to Lender a certificate to that
effect that neither the Substitute Property nor any portion thereof is leased to
any Person other than pursuant to the Operating Lease.
(s) Lender shall have received copies of all Material Agreements
relating to the leasing and operation of the Substitute Property to which
Borrower will be a party together with a certification of Borrower attached to
the Operating Lease and Material Agreements certifying that the attached copy is
a true and correct copy of the Operating Lease and such Material Agreements and
all amendments thereto.
(t) The Operating Lease shall have been amended effective as of the
date of substitution (i) to include the Substitute Property as part of the
premises demised thereunder and (ii) deleting the Substituted Property from the
list of Individual Properties (as defined in the Operating Lease) on Schedule 1
to the Operating Lease.
(u) The Management Agreement shall have been amended effective as of
the date of substitution (i) to include the Substitute Property as one of the
Facilities (as defined in the Management Agreement) covered thereby and (ii)
deleting the Substituted Property from the list of Facilities (as defined in the
Management Agreement).
(v) Lender shall have received a Seismic Report indicating the Seismic
Zone in which the Substitute Property is located.
(w) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the substitution as the
Rating Agencies may have requested.
(x) The Substituted Property, when taken together with all other
Substituted Properties which were the subject of a substitution pursuant to this
Section 11.29 in the same Loan Year shall not total more than five percent
(5.00%) of the number of Individual Properties which make up the Property.
(y) Upon satisfaction of the foregoing, but not less than five (5)
Business Days prior to the date of such substitution (or such shorter period as
is approved by Lender in its sole discretion), Borrower shall submit to Lender a
partial release of Lien (and related Loan Documents) for the Substituted
Property for execution by Lender. Such partial release shall be in a form
appropriate for the jurisdiction in which the Substituted Property is located
and reasonably satisfactory to Lender. Borrower shall deliver an Officer's
Certificate certifying that the requirements set forth in this Section 11.29
have been satisfied.
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11.29.2 Release and Substitution. Upon the satisfaction of the
foregoing conditions precedent, (a) Lender will release its Lien from the
Substituted Property to be released, (b) the Substitute Property shall be deemed
to be an Individual Property for purposes of this Agreement, (c) the Substitute
Allocated Loan Amount with respect to such Substitute Property shall be deemed
to be the Allocated Loan Amount with respect to such Substitute Property for all
purposes hereunder and (d) the Allocated NOI of the Substituted Property shall
be the Allocated NOI for the Substitute Property.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
LENDER:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a
New York corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BORROWER:
KC PROPCO, LLC, a Delaware limited
liability company
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
and General Counsel
-96-
Schedules and Exhibits Omitted